Car Leasing / Finance Lease
- Car Leasing or 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.
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Advantages of car finance lease
 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 of car finance lease
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
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