What is Business Finance Lease? – Suitability Explanation
Business Finance Lease provides the flexibility to use a car or commercial vehicle for a fixed period, and at the end of the agreement, you have the option to continue leasing, or to sell the vehicle to a third party. The rentals are calculated based on the original capital cost of the vehicle, the duration of the agreement, and whether a “Final Balloon” payment has been set at the start of the agreement.
Your business assumes responsibility for disposing of the vehicle at all times, and therefore the risk on its future value.
Find out how Concept Vehicle Leasing can help you or your business.
Business Finance Lease – Key Benefits
Future Value – You choose if you want to sell the vehicle at the end of the contract, and typically retain around 95% of any profit on disposal. Alternatively you can continue to lease for a nominal annual rental.
Cashflow Friendly – Business Finance Lease requires a low initial rental of typically around 3 monthly rentals, and regular rentals are fixed for the duration of the lease.
Recover VAT – If your business is VAT registered, you’ll be able to recover 50% of the VAT on the “Lease” on a car if there is private use of the vehicle. If it’s a commercial, then you’ll be able to recover 100% on the “Lease”.
Unrestricted Mileage – Your business remains responsible for disposal of the vehicle and therefore its value, and therefore there are no restrictions on mileage.
No Damage Charges – As you are responsible for the future sale of the vehicle, there are no dilapidation charges from the leasing company in the event of damage.
Additional Credit Facility – avoid the need to invest capital or tie up bank credit and use Business Contract Purchase as a way of adding cars to your business.
Peace of Mind – Service, Maintenance & Tyres may also be included for an additional amount, providing complete peace of mind.
Are there any disadvantages to Business Finance Lease?
With Finance Lease, your business is responsible for the future sale of the vehicle. The value of the vehicle may fluctuate, and it may not be worth as much as originally determined at the start of the agreement. Your business would need to make up any shortfall between the disposal value, and any amount outstanding under the terms of the agreement.
The vehicle cannot be sold to your business or a Director of the business at the end of the contract. It must be sold to a “Third Party”. Finance Lease is not suitable should your business wish to own the vehicle.
If a vehicle is provided for “Private Use” through the business, then employees and Directors will be liable for “Benefit in Kind” tax.
What else do I need to know about Business Finance Lease?
Financial Obligations – Business Finance Lease is a fixed term agreement, so ensure you will be able to afford the rentals for the duration of the lease before you agree to go ahead.
Credit Approval – Your business will need to be approved for credit with one of our lenders before a lease can go ahead. Speak with your Account Manager if you are unsure of the requirements for securing credit for your business.
Hire and Reward – The lenders we work with will not permit cars to be used for minicab services, and there are exceptions for usage for courtesy cars or driving schools.
For further information or advice on Business Finance Lease, contact Concept Vehicle Leasing on 0800 043 2050 and the team will be happy to help.