What is finance lease?

When it comes to leasing a car, we offer a variety of different finance plans. Finance lease may be ideal for you, depending on your situation, although it is not always the best choice.

When you work within a business, flexibility is one of the key parts of success, no matter how large or small you are. If you have a business that requires at least one vehicle, but you do not have the finance to pay for them, a car finance lease is best tailored to you.

What exactly is a finance lease, and just how does it work?

If you choose a finance lease it means you are accepting a way of financing a vehicle that can normally be available through businesses and companies that are Value Added Tax registered. Even if you are a sole trader, finance lease can still be available for you to use.

In a nutshell, finance leasing is a way for you to pay for your car, although the vehicle will still remain the property of the provider. The vehicle is then hired out to your business. It is then possible for you to use your car as an asset for your business, all while paying a rental instead of a whole repayment.

Like with the majority of leasing options, it is paid on a monthly basis. These costs are determined by looking at how much the initial cost of the vehicle was, how long the lease will last for, the overall value and the end balloon payment. A lot of people believe it is based off the vehicles residual value, but that is not always true.

As the overall vehicle value will be used to calculate the monthly rental costs, we do suggest that you stick to a certain mileage limit. The reason for this is that this value will have a large effect on the future value of the vehicle. if you do exceed the limit, however, there is no need to worry. We allow our customers to extend your mileage limit, although it will cost an extra fee.

One thing to bear in mind is that when you take out a finance lease, you have the full use of the car over the whole period. Once the finance lease agreement has finished the vehicle will be sold to a third party by us.

If it ends up that the final sold price is above the pre-planned balloon payment, then we will refund you a percentage of the profit. This does entirely depend on the selling price, so there is a chance that you might not receive any profit.

In some cases, it may be that the sale price ends up below the balloon payment. This means that you, the hirer, will have to make a further payment so that the payments match. This does not happen all the time, but it's still something to bare in mind.

Who is a finance lease agreement best suitable for?

If you choose a finance lease, it removes the pressures that normally occurs when a contract involves a lot of initial money. It's a method that has been proven to give companies access to a range of the latest vehicles without the need to take ownership of them, or even buying them completely.

As a business, you will find that there are numerous tax benefits when you choose a finance lease contract. This definitely makes it an ideal car financing option for a business.

To make things easier, we often allow a business to pay the whole cost of a vehicle. This includes any interest, and it's all agreed on over a specific lease period.

Depending on your circumstances, we may give you the chance to extend your finance lease with a secondary rental.

What are the major benefits of finance lease agreements?

One of the most appealing reasons that a company will take out a finance lease is the fact the monthly costs are low compared to when owning a car. The initial outlay is also a lot lower than other financing options, so that's important to bear in mind.

Finance lease is also more flexible than other agreements. This is why we allow different payment options that are best suited to your budget. You will have the opportunity to make deferred payments, lower your monthly rental with the balloon payment when it comes to the end of your contract, or even pay the whole cost in monthly installments.

With leasing, you can have access to some of the latest vehicles for an affordable monthly payment. Once the agreement is over, you can lease another car instantly, meaning you can have a brand new vehicle on the same day.

Value Added Tax payments are something that attract a lot of people to finance lease contracts. Up to 50% of these payments can be reclaimed, allowing you to receive money back. Hire rental tax allowance is something you can apply for as well.

LeaseCar and you

Here at Lease Car, we have a wide range of the latest vehicles for you to choose from. Whether you want the latest model, or something a bit older, we can accommodate your business needs. We have different leasing options, so you can be sure that we have something for you.

If you have any questions at all, please get in contact today.