Business finance lease guide


What is a business finance lease?

A business finance lease is a popular option for commercial vehicles where business contract hire is not suitable (cars can also be financed as well). It is great for businesses that require one or more vehicles and does not have the money to pay for the asset.

It is a tax efficient option where you choose to pay either the entire cost of the vehicle, including interest charges, over an agreed lease period or opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle. The vehicle is registered in the lessor's name initially.

Road fund license after the first year is a cost which is re-invoiced to the customer, the vehicle remains in the name of the finance company.

A finance lease is different to that of contract hire, as you have to pay a balloon payment at the end of your leasing agreement. This balloon payment pays off the finance company's investment. The balloon payment figure is agreed at the beginning of the contract and is dependant on whether you want higher or lower monthly payments during your contract term.