Finance Lease allows clients to benefit from the VAT advantages of leasing while retaining the potential profits generated by vehicle sales. Under this method, assets remain on the clients' balance sheet and can be set over flexible periods.
Available in two standard formats, residual value or fully amortised, Finance Lease delivers VAT and corporation tax benefits that are similar to those of Contract Hire, however, the risk and responsibility for resale at the end of the term remain with the customer.
A residual value lease offers monthly rentals that are lower than typical loan repayments for an equivalent capital amount, as the monthly rental rate is based upon the diminishing value of the asset, with a final balloon payment covering the anticipated residual value.
Under a fully amortised lease, the monthly repayments reflect the full value of the vehicle over the primary lease period. At the end of the term, the lessee may elect to lease the vehicle for a secondary period at a nominal rental. Alternatively, Inchcape Fleet Solutions can sell the vehicle on behalf of lessee.
Irrespective of the type of lease chosen, the interest on repayments can usually be offset against taxable profit, while capital outlay is reduced through lower monthly rentals. In addition, clients benefit from a low initial payment and fixed rates of interest.
