What is finance lease?

Finance Lease Information customer document

A finance lease allows the lessee to hire an asset for a fixed monthly fee, but it also transfers substantially all of the risks and rewards of ownership of the asset to the lessee.

There are many examples of what can be financed including; plant and machinery, agricultural equipment such as farm machinery, construction equipment, materials handling equipment and technology equipment.

The usual initial rentals start at three rentals but are flexible. You can keep the initial outlay low if required or higher if you prefer lower monthly rentals. You pay Vat on the monthly rentals instead on the cost of the item and you can also choose a final rental payment to defer some of the cost or alternatively finance the whole capital cost of the item.

At the end of the contract the item is sold and you receive around ninety seven and a half percent of the proceeds. This amount varies between finance companies. The finance company owns the equipment until it is fully paid which means you can not claim write down allowances, however this is reflected in your monthly rentals.

At the end of the term, the item has to be bought on an “Arms Length” agreement. It can’t be bought by the company that has received the tax benefits during the life of the agreement. Finance Lease is only available to businesses, partnerships and sole traders where they are vat registered.

In addition to providing finance lease for business assets such as machinery, plant and equipment Finance Lease is often used for vehicles and since our parent company National Fleet Services specialises in vehicles we are able to recommend that company to any clients that need finance lease for vehicles whilst we look after the other assets.

Contact us today if you have any questions
0121 452 1977