- Is the vehicle being paid for by the business?
- Is the business VAT registered?
- Is there a possibility that the vehicle may not be kept in good condition?
If the answer to the above is YES then Finance Lease may be for you.
he company pays a fixed monthly payment. At the end of the agreement, which can be between 1 and 4 years for a car and 5 years for a van, the vehicle is either sold to clear the final payment or you opt to extend the contract for a further year at a nominal charge, typically just 1 monthly payment
Main Features
VAT registered businesses can offset 50% of the VAT on the rentals if it is a car because you never have ownership. On a van 100% off the VAT on the rentals can be reclaimed. This offers significant savings, which normally cannot be had for cars.
The company can offset the finance interest charges against corporation tax, enabling a reduction in the true costs.
The finance house has no interest in how many miles the vehicle is doing or the condition of the vehicle. This is ideal for vehicles which will not be kept in good condition or are doing excessively high mileages. (40,000 miles a year or more)
- At the end of the agreement the company can opt to become an agent for the finance house;
- For a car sell the vehicle to a 3rd party to clear any outstanding finance, for a van the vehicle can be purchased by the business or sold to a 3rd party;
- You may elect to go into a secondary period and keep using the vehicle for a further year, typically at a charge of just one payment. Then the decision can be made again whether to sell or keep, offering flexibility and value to many clients.
OSV tip: “Care should be taken before entering into a finance lease that you truly understand your responsibilities and the fees within the agreement, it is not for everyone"
