Finance lease is a method of funding that allows you to use a vehicle
without ever taking ownership. You are charged rentals throughout
the contract period based on the purchase price and estimated
residual value and at the end of the contract you return the vehicle
to the lease provider who will sell it. If the resale value exceeds the
estimated residual value you will be rebated the difference (taking
into account disposal costs), however if the resale value is less then
you will need to pay the lease provider the difference.
As you take the residual value risk, you will account for finance lease contracts as fixed assets which are recorded on your balance sheet.
Finance lease is often suitable for organisations used to outright purchasing who want to consider the funding benefits of leasing but who are comfortable taking the residual value risk on resale and therefore do not want to contract hire their vehicles.
Although you never take ownership, at the end of the finance lease contract a payment equivalent to the residual value is payable. Usually this means that the vehicle is sold and a proportion of the proceeds of the sale are returned to the lessee.
Most finance lease companies will offer a number of payment options to suit your cash flow. You can lower the monthly rental with a balloon payment at the end of the contract, or you can pay the entire cost in monthly rentals (normally referred to as a fully amortised Finance Lease), in which case you may be able to extend the finance lease with a secondary rental (sometimes called a peppercorn rental).
* All vehicle images and car descriptions on this site are for illustration and reference purposes only and are not necessarily an accurate representation of the vehicle on offer.
T: 01702 410 470
Planet Leasing Limited
91-93 Leigh Road
Planet Leasing Limited are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 688093. Planet Leasing Limited is an Appointed Representative of AutoProtect (MBI) Limited which is authorised and regulated by the Financial Conduct Authority for Insurance Mediation, their reference number is 312143. You can check this on the FCA Register by visiting the www.fca.org.uk or by contacting the FCA direct on 0300 500 8082
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Registered Office : 601 London Road, Westcliff-on-Sea, Essex, SS0 9PE
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