Choosing the best option to finance your business vehicles can often seem quite arduous There are several options to choose from and this can be quite confusing. Which option is the best for you? Are there any concealed clauses that could give you a nasty surprise down the track? For example, a condition of some of the options is that you maintain a shared ownership of your new fleet vehicles until you have paid off the loan completely.
If you want to stay away from such unfavourable conditions and just have a straightforward financing option without the hassles, you may want to think about choosing a standard Car Finance Lease.
How Does a Finance Lease Work?
Fundamentally, a finance lease is simply a rental agreement between you and the provider of the lease. The lease provider will remain the vehicle owner while the lease is in force. However, unlike a conventional lease agreement, the lease payments will be put towards the agreed value of the car. This means that you become the owner of the vehicle in full once the lease is paid off. The benefit for you is that because the lease provider is the owner of the vehicle and not you, the company that provides the lease is responsible for ensuring the vehicle is in good working condition. If happens to your vehicle or it cannot be used properly, then the lease company should usually transfer your lease to a similar but working vehicle. Please ensure you check the terms and conditions of your lease to confirm this is true.
Am I Eligible For a Finance Lease?
To be eligible for a finance lease, the main condition is that you use the vehicle in the main for business. Each lease provider will have different business usage requirements but as a rule of thumb, make sure the time you use your vehicle for business is a minimum of 50 to 60%. Most businesses are usually eligible for a finance lease.
Options for Finance Leases
If you decide to go ahead with a finance lease, then take the following into consideration:
- Over what length of time would you like the lease to be?
- What lump sum amount would you like to pay upon expiry of the lease Make sure you confirm this so you don't get a nasty surprise.
Some lease providers may also allow you to take out an extended lease. With this option, you can trade in your old vehicle for a new one as new vehicles become available. You will continue to pay the lease for a longer term but you now have a new car.
Also, provided that you meet business usage requirements, there are often some tax deductions that you can take advantage of.
Take your time and do your research carefully and find the most appropriate lease. Every finance lease provider will offer you a different combination of interest rates and financing terms. So compare the various options to make sure you get the lease that best meets your business needs. Get in touch with different lease providers and speak to them - make sure you let them know that you want a business lease quote and not a personal lease quote.
Things to compare include: interest rates, estimated payment amounts, the length of the lease and the final balloon payment. If you take the time to examine the different options and make suitable comparisons, you will be in a far better position to choose the most appropriate lease option for your business.