Finance Lease

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This method of finance is designed to take advantage of a vehicle's future sale value. The monthly payments are effectively reduced from the outset of the agreement period. The agreement is a rental agreement under which other services such as maintenance are not normally provided or included.

The rental is calculated on the type of vehicle required, the period of use and the anticipated mileage which will be covered during the contract. This will help to determine the 'balloon rental'. Which is based on the anticipated future value of the vehicle at the end of the contract. The monthly rental paid is therefore only interest and the depreciation of the vehicle.

Unlike contract hire and contract purchase the risk always remains with the client so should the vehicle make a profit or a loss on disposal the client will either pay the shortfall or enjoy the benefit of the profits.

The client remains responsible for the maintenance and running costs of the vehicle until the lease expires. The client has several options upon the expiry of the lease that should provide a suitable way to deal with the vehicle according to their particular circumstances at that time.

  1. The vehicle is sold by the client to a third party to meet the. Balloon. And a new lease is entered into with the client selecting a suitable vehicle to meet their new requirements.

  2. The client may wish to enter into a Secondary leasing period that can extend the use of the existing vehicle. The vehicle would be capitalized at the “Balloon” amount and a “new. Balloon rental” set for the new period. This has to be agreed by the company with assessment being made on merit depending on the type of vehicle, its age, mileage and overall condition.

Summary of Benefits

  • Any Vehicle make and model

  • New or Used vehicles

  • Streamlined Rentals

  • Improved Cash Flow

  • Protects Working Capital

  • Potential Profits on Disposal

  • Tax Efficient

  • Accelerated Tax Allowances

  • Improved Budgeting

  • VAT Efficient