Car Finance Lease

Car Finance Lease is a Hiring Agreement where the vehicle remains the property of the Finance Company.
The Hirer is responsible for Residual Value ( Balloon Rental ) on car finance lease contracts.
The Hirer is responsible for all maintenance and Road Fund Licence.
Title in the Vehicle can never pass to the hirer.
On disposal of the vehicle, to a third party, the Finance Company will refund to the hirer a percentage of the sales proceeds after deducting the Balloon payment.

Advantages

1. Low initial outlay
2. Low monthly outlay. Hirer only pays for depreciation and finance lease charges during the course of lease.
3. Finance lease charged on VAT exclusive price of new and qualifying cars.

Disadvantages

1. No or reduced equity in the car at the end of the finance lease contract.
2. VAT on rentals only 50% of which is reclaimable.
3. Cars and vehicles appear on balance sheet as per SSAP 21
4. Hirer takes risk of any loss on the sale of the car.
5. Pay interest on outstanding Balloon payment