Finance Lease Explained

By Jasmine Baker
Finance Lease Explained

What is Finance Lease?

There are a number of different finance options when it comes to acquiring your next vehicle. Here at MWVC, we have a team of staff that work tirelessly to get you the best deal possible. We work with some amazing funders who only want to help you get the vehicle that is right for you and your business. Finance Lease might not be a term that you have heard before, so our aim is to explain what it is and show you how it might just be the finance that is right for you.

Finance Lease is a great way for businesses to lease one or multiple vehicles at a great price. Finance lease works in much the same way as Contract Hire, where you choose your initial payment amount and then the length of your contract term. The biggest difference being that you are not bound by a set yearly mileage; your estimated mileage is taken into account while calculating your final payment, but you will not be penalised for excess mileage. You also won’t be charged for a few ‘battle scars’ should you acquire them, as the vehicle is not returned to the funder.

man loading a white van with boxes

Finding The Best Deals

Browse our website and find your ideal vehicle, or vehicles, and send us an enquiry. We will contact you to discuss your needs and circumstances and get back to you with a personalised quote. Your quote will include your initial rental, the monthly rental and then the final rental. The initial rental is an agreed amount and is usually based on a multiple of the monthly rental and would normally be 3, 6, or 9 times the monthly rental: but other options can be negotiated. The larger the initial rental is, the lower your monthly rental will be.

Most leases are between 2 and 5 years and then there is a final or balloon rental, which is a predetermined value of your vehicle at the end of the lease; this is based on the miles you expect to use it for and the condition you expect it to be in: this will vary depending on what you use the vehicle for. If you have a van that is used to transport heavy and large items around, then you may be likely to get a few scuffs on the body of the van. However, if you are using the vehicle to simply deliver flowers locally then you may not have any damage, no matter how minor, to the vehicle.

At the end of your lease you must sell the vehicle to a third party, this could be a friend, family member, a business, or even us. In some cases, we will buy the vehicle back from you if it meets our resale criteria. You may even be able to make a profit if you can sell the vehicle for more than the final payment that you need to make. You get to keep anything that is above the payment amount, but you do need to take into account that there is a 2% final sales fee.

You can read more about Finance Lease in a PDF on our website, or you can call us, and we are happy to answer any questions that you may have and explain the process to you.

two men and woman looking over a contract

Not Very Taxing

As a business, you may be pleased to know that you may be able to claim the tax back for your vehicle or vehicles that you have leased. Finance Lease is great for this as you never own the vehicle, so you can offset the cost against taxable profits.

If you are a VAT registered business, then you will be able to claim back up to 100% of the VAT on your lease payments: depending on if the vehicle has been used for personal use or not. If you have a maintenance package added to your lease, then you will be able to claim back 100% of the VAT of this element. This is good news for businesses, and it allows you to always have new vehicles to use at very little cost to your business.

We understand that this can be confusing, and that everyone's situation and business is unique, and we are always happy to talk you through all the options. We have some short videos on our ‘Business Leasing’webpage that may be useful. Feel free to consult your own accountant or a third party professional for advice to ensure that you have the best option for you and your business when it comes to tax and VAT.

woman typing and holding a calculator

The Wrap Up

Hopefully, you understand what Finance Leasing is a bit better now. As with any financial lease or contract, it can get confusing and complicated, and we appreciate that there may be more things that you want to know. Please don’t hesitate to contact us if you have any questions, either before, during or after your lease. Modern businesses are constantly changing and evolving to keep up with changing demands. We understand that as a business, your needs might change, and we are here to help if you need to increase or decrease the number of vehicles you have on Finance Lease. Our funders are amazing, and we work closely with them to help make sure you get the best deals possible.

We have dedicated staff waiting to help you, so please call us here at MWVC today.