Commercial Vehicle Finance Lease
Commercial Vehicle Finance Lease is a popular finance agreement for businesses needing finance for cars, vans and commercial vehicles. With Finance Lease the vehicle is hired to you by the finance company and remains the property of the finance company at all times. Monthly payments and interest rates are fixed for the duration of the contract. VAT is payable on the monthly rentals rather than in full at the outset of the contract.
Finance Leasing can be the preferred option for Partnerships, Limited Companies & Sole Traders due to the significant tax advantages.
How does commercial vehicle finance leasing work?
Although a Commercial Vehicle finance lease will look and feel the same as a hire purchase, you will not end up owning the asset at the end of the contract. Ownership remains with the finance company at all times.
The agreement is structured so that you pay off the whole value of the asset. If you are still using the asset at the end of the original contract, a further contract can be arranged.
You will be able to offset rental charges against profits and you are able to claim back VAT as well. The agreements can be structured in different ways but you may find that you can choose when to sell the asset and, if so, get a rebate of the sale proceeds.
What are the benefits?
Key benefits for acquiring commercial vehicle finance lease include:
- Fixed payments for the whole agreement
- Low deposit – for just a small outlay, you can use the asset immediately
- 100% tax deductible – get back between 18% & 40% of your total payments back (including your deposit)
- Flexible repayment structure tailored to match your cash flow
- Fixed or variable interest options – you decide which suits you best
- Tax advantages – VAT is payable on the rentals, not the purchase price, while payments can normally be offset against taxable profit.
- No penalty charges for additional mileage or damage at the end of the agreement • Although the customer does not own the vehicle, they will receive up to 98% of the sale proceeds. Where a ’balloon rental’ has been introduced, these proceeds are utilised to help clear the rental.