This is because instead of the vehicle being collected from you and disposed of by the Finance Company it is up to you to sell the vehicle on behalf of the Finance company; you can keep most of the sale proceeds. The Finance company will charge you a fee normally of between 1 and 5% of the sale price of the vehicle (you keep the rest!) Obviously the rentals are higher than with contract hire but you have the added benefit of you retaining most of the vehicles value.
Van Leasing Deals
Finance Lease
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Finance Lease is now becoming more popular than Contract Hire. It essentially offers the same tax benefits as contract hire with none of the pitfalls. The main difference is that there are no mileage or condition penalties at the end of the agreement as with contract hire.
The main benefits of Finance Lease for Business are
Two attractive options at the end of the Agreement - give you options at the end of the agreement allowing you to base your decision on market conditions at the time. You can either continue to use the vehicle, or sell it and retain most of the sale proceeds.
Secondary lease period available - if you decide to continue to use the vehicle at the end of the agreement, nominal rentals are payable, usually annually.
Profit from the sale of the vehicle - if you decide to sell the vehicle at the end of the agreement, you can do so, and will be able to keep a percentage of the proceeds from the sale (usually 95-99%).
Low deposit normally equal to three monthly repayments for easier cash flow
Contracts from 12 to 48 months
No Mileage or Condition penalties
Vehicle is off your balance sheet
A proportion of the rentals allowable against tax
Low fixed cost monthly rentals
Two attractive options at the end of the Agreement - give you options at the end of the agreement allowing you to base your decision on market conditions at the time. You can either continue to use the vehicle, or sell it and retain most of the sale proceeds.
Secondary lease period available - if you decide to continue to use the vehicle at the end of the agreement, nominal rentals are payable, usually annually.
Profit from the sale of the vehicle - if you decide to sell the vehicle at the end of the agreement, you can do so, and will be able to keep a percentage of the proceeds from the sale (usually 95-99%).
Low deposit normally equal to three monthly repayments for easier cash flow
Contracts from 12 to 48 months
No Mileage or Condition penalties
Vehicle is off your balance sheet
A proportion of the rentals allowable against tax
Low fixed cost monthly rentals
If you decided you wanted to keep running the vehicle after the contract has ended then this is also possible with Finance Lease. You can pay a one of fee and keep the vehicle for another 12 months (this fee is roughly equivalent to one month’s rental!)
