Business operating lease guide


What is Business Operating Lease?

A business operating lease is similar to contract hire except for the fact that you (the customer) will be classed as the registered keeper of the vehicle instead of the finance company. This type of lease is normally for a fixed period, usually for 24, 36 or 48 months.

As with any other lease, the monthly rentals are based on a number of different factors and are determined by:

  • The cost of the vehicle to the finance company
  • The price of the vehicle at the start of the agreement
  • The mileage which is agreed within the contract
  • The projected residual value
  • Interest rates

A business operating lease is cost-effective and has many benefits to a company or business individual. The benefits of choosing a business operating lease are:

  • Eliminates capital expense
  • An additional line of credit
  • Fixed monthly rentals which fit in with your budget
  • The vehicle does not need to be disclosed as an asset on a business balance sheet
  • VAT can be reclaimed, depending upon it's usage and if the customer is VAT registered
  • Vehicle is returned at the end of the lease period
Each finance agreement is different as it depends on the terms and details set out by the finance company. During the contract you may be responsible for:

  • Repairs and maintenance
  • Road fund license
  • Insurance
  • MOT and servicing

If you take out a fully maintained contract, the finance company may be responsible for some of the items mentioned above.
The vehicle is simply returned to the finance company at the end of the lease period and you have no further obligations. However, you may be required to pay for:

Other business finance products you may be interested in are:

business contract purchase guide
Business contract hire is the most popular type of lease available in the UK.

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business contract purchase guide
Business contract purchase gives the customer the option to purchase the vehicle at the end of the contract.

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business finance lease guide
A popular way of funding business commercial vehicles when contract hire is not a suitable option.

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business lease purchase guide
A business lease purchase is for those who wish to buy a vehicle but don't have the immediate finances.

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