Finance leasing is an option usually exercised by VAT registered companies and organisations. It is usually recommended to companies where a moveable asset (vehicle) is bought from a supplier. The company can then use the asset whilst paying an effective rental, as opposed to a repayment. Monthly rental rates are determined by the initial value of the vehicle, the length of the lease and the residual value. The latter value obviously takes into account depreciation alongside a determining mileage limit.

The user has full use of the car throughout the finance lease term but will never take full ownership. On completion of the contract, a payment is due which equals the residual value; typically meaning the vehicle is sold and some of the proceeds go to the lessee. On the other hand, the user can decide to pay the whole cost of the vehicle, with interest, in monthly installments.

There are some finance lease providers out there that can offer the option of extending the lease with a secondary rental.

The Pros & Cons of Finance Lease


  • Minimal monthly costs and initial expenditure.
  • Excellent flexibility allowing you to choose from a number of different payment possibilities.
  • Choose between monthly installments or deferred payments with a concluding balloon payment.
  • Access to the latest high specification vehicles.
  • Up to 50% of VAT payments can be reclaimed, 100% if a commercial vehicle.
  • Option to feature the vehicle on your balance sheet.
  • Option to boost your equity with a proportion of the concluding sale


  • Lack of ownership of your vehicle

Is Finance Lease right for me?

A finance lease contract provides access to the most modern vehicles without the burden of your business actually having to own and purchase the vehicles outright. This removes the pressure of having hefty initial expenditures. The tax benefits also make this option ideal for most businesses.