Finance Lease

What is Finance Lease?

If vehicle damage and inconsistent mileage has meant costly end-of-term penalties in the past, Finance Lease makes a great choice – especially for Light Commercial Vehicle (LCV) fleets.

You can choose to pay the total cost of the vehicle, including interest, over an agreed contract term, or you can pay a lower monthly rental with a final balloon payment based on the anticipated resale value.

Throughout the lease, the vehicle remains the property of the leasing company, and there aren’t any end-of-contract damage or over-mileage charges, which makes finance leasing ideal for LCV fleets where mileage is high or fluctuates, and a lot of damage can occur.

How it works

There are two ways to Finance Lease:

Option 1: Full Payout Lease

There are two options at the end of the lease:

  1. Keep the vehicle for a ‘secondary rental’ period requiring a small annual rental contribution.
  2. Sell the vehicle to a third party and receive a percentage of the proceeds.

Option 2: Balloon Lease

There are two options at the end of the lease:

  • Sell the vehicle to a third party, receive a percentage of the proceeds and pay the balloon. Any deficit after the sale must be covered.
  • Pay balloon – covering any deficit or receive the proceeds by entering into a ‘secondary rental’ period requiring a small annual rental contribution.

Business lease tax benefits

Business vehicle lease rentals are an allowable expense, which can be offset against tax.

Lease rental restrictions apply depending on emissions:

  • LCVs allow 100% of the rental to be tax allowable.
  • Cars with CO2 over 50g/km qualify for 85% to be claimable against taxable income.
  • Cars with CO2 of 50g/km or lower are also 100% tax allowable – this makes EVs an attractive business proposition, allowing early adoption while lowering business costs.

Peace of mind with a maintenance plan

Keeping up with servicing, replacement tyres, and repairs can bring unexpected costs, but adding a Service Maintenance and Repair (SMR) plan to your monthly fixed payments will help you budget, all while being 100% tax allowable and 100% VAT reclaimable.

All our SMR plans come with Driverline, our 24/7, 365 days a year driver support service to help increase fleet uptime. Our team are available on the phone and via our web app if you need roadside assistance, accident management or maintenance bookings, such as same-day servicing and repairs.

Here to help

Finance leasing offers a middle ground between outright purchase and full leasing, providing a flexible alternative to contract hire. Talk to one of our team to find out more.