Finance lease explained
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to give you a clear understanding of who each funding option is suited to1. Full details of finance lease
Finance Lease is a tax efficient option where you can choose to fund the entire cost of the vehicle, plus interest, over a set period or pay lower monthly rentals and then a final payment based on the anticipated resale value of the vehicle.
The vehicle is shown on the balance sheet and the VAT is reclaimable. The monthly rental is determined by the cost of the vehicle, the period of the contract and the proposed annual mileage.
With Finance Lease you do benefit through fixed cost motoring with optional maintenance packages but also take on the administration and operating risks for the vehicle.
To find out if Finance Lease would suit your organisation, call us now on 0870 224 2772 and we can help you make the decision that's right for you.
2. Key benefits of finance lease
- Finance Lease means that VAT is recoverable on monthly rentals
- Finance Lease allows for accurate monthly budgeting
- Finance Lease provides improved cash flow
- Finance Lease ensures you have a minimum capital expenditure
- Finance Lease provides a fixed interest rate
- Finance Lease means that rental is allowable against taxable income
- Finance Lease means that VAT is chargeable on rental
- Finance Lease means that VAT is recovered on purchase cost by Network and passed on to customer in lower rental
- Finance Lease provides reduced administration
- Finance Lease provides on-going advice/support
- Finance Lease provides optional GAP insurance
3. Your options at the end of the contract
The balloon Rental is due - do you want to pay it now?
Do you want to finance the vehicle for a further period?
You can get a quotation to re-finance your final rental amount (subject to this being over £2,5000) from your Network franchisee. This can be for any tiem period up until the vehicle reaches 60 months old. If the quotation is acceptable, sign the form and return it to your Network franchisee. They will then get documentation to cover this new period drawn up for you to sign.
The Refinance period will expire - This example assumes that no further refinance is possible, although it could go through the cycle again!
Tha Balloon Rental will be invoiced for payment by DDM
Do you wish to continue to use the vehicle?
Once the Balloon rental is paid, you can continue to use the vehicle for as long as you wish, although you can never actually own it. We will maintain the agreement by invoicing you for the secondary (peppercorn) rental amount, which is payable annually in advance. We will continue to invoice the peppercorn until you sell the vehicle and advise of the sale as in
The vehicle must be sold. Will you sell it?
You must sell the vehicle as our appointed agent to any party that is not the company that hired the vehicle, any Director or member of their family. Once this is done, you need to send Netowrk a copy of of the sales invoice and 2% of the sales proceeds. You will retain 98% of the sales proceeds as a rebate against the final rental payment
Contact your Network franchisee or Network direct and we will help dispose of the your vehicle for you
Your Network franchisee will be pleased to review your options for your next contract