Finance Lease

Finance Lease is ideal for VAT registered companies who want to handle the administration of their vehicles, and have the asset shown on their balance sheet. A VAT beneficial finance option where you can choose to fund the entire cost of the vehicle over the agreed term (fully amortised), plus an interest charge, or pay lower monthly rentals during the lease period with a final balloon rental based on the age and mileage of the vehicle.

How Does It Work?
Fixed Period Finance Leasing
This is another cost effective option, traditionally used by VAT registered businesses. With a finance lease - unlike contract hire, the lease shares in the profit or loss on the sale of the vehicle at the end of the agreement. There are two types of finance lease - fixed period and full layout.
Finance leasing brings with it all the tax advantages mentioned for contract hire customers.

A checklist of the main benefits:
- Lower monthly rentals as the finance company reclaims VAT on the vehicle purchase - benefiting your cashflow
- You can reclaim 50%* of the VAT on the monthly rentals
- Your initial capital outlay is reduced allowing your funds to be retained in the business.
- The rentals are allowable against tax** reducing your tax liability.
- Monthly rentals are fixed, so budgeting is easier.

* 100% of the Vat on rentals can be reclaimed on cars used exclusively for business and on commercial vehicles. If any private use occurs (e.g. taking the vehicle home at night), 50% of the VAT is reclaimable. It should also be noted that this could lower depending upon the individual VAT recovery position of the business.
** The proportion of rentals that can be claimed is reduced for high cost cars.
Fixed Period Finance Leasing
A fixed period lease enables monthly rentals to be reduced over a fixed period by agreeing an anticipated future value on the vehicle. This anticipated future value will be paid at the end of the agreement, normally out of the proceeds of selling the vehicle.

PAYMENT STRUCTURE AT A GLANCE
Rentals In Advance
Agreed Number of Monthly Rentals
Agreed Anticipated Value/Final Rental Due.
Vehicle Must be Sold to Third Party.
Start of agreement
---------------------------------------->
End of agreement


How it works
First choose the vehicle. Then select an agreement period. Depending on the agreed length, we ask you to pay a number of monthly rentals in advance. You'll undertake to pay a fixed number of low monthly rentals and a large final rental, which represents the anticipated future value of the vehicle at the end of your agreement. And then, provided you've fulfilled all the terms of the agreement, you arrange to sell the vehicle on behalf of the leasing company to a third party.
If the vehicle is sold for more than the final rental due, the difference, after deduction of VAT, will be rebated to you.

Full Payout Finance Leasing.

With a full payout finance lease you will be asked to pay a number of monthly rentals in advance followed by an agreed fixed number of monthly rentals.
If you sell the vehicle to a third party, then upto 95% of the VAT exclusive sales proceeds are rebated to you. Alternatively, if the vehicle is not sold to a third party, then you may continue to use it, and enter into a secondary rental period. the secondary rental period is calculated as 1% of the original vehicle cash price plus VAT per annum.

PAYMENT STRUCTURE AT A GLANCE
Rentals In Advance
Agreed Number of Monthly Rentals
Vehicle Sold to Third Party or Secondary Rental Begins.
Start of agreement
---------------------------------------->
End of agreement


How it works
First choose the vehicle. Then select an agreement period. Depending on the agreed length, we ask you to pay a number of monthly rentals in advance. You'll undertake to pay a fixed number of low monthly rentals. Then, provided you've fulfilled all the terms of the agreement, you arrange to sell the vehicle on behalf of the leasing company to a third party or alternatively you may begin a secondary rental period.