What is Finance Lease?
Finance Lease is a credit agreement most usually chosen by business customers – including limited companies, self-employed individuals and sole traders.
We will pay the retailer for your chosen vehicle or asset, less any advance rental and VAT paid direct to the dealer. The balance, plus interest charges and VAT being repaid to the fiance company monthly over a fixed term, usually between 12 and 48 months. The monthly repayment is a fixed amount, regardless of what happens to interest rates. The term is fixed, although a customer can pay in full and settle the agreement at any time. In settling early, the customer may benefit from a rebate of the interest. The vehicle is registered to the customer, who also keeps the V5 log book. We will register a financial interest with HPI. At the end of the term, the vehicle can either be sold to an unrelated third party, or alternatively the user can continue to operate the vehicle for a smaller secondary rental. You will not own the vehicle.
What is needed from the customer?
With finance lease agreements, an advanced rental (which will be subject to VAT) is required, rather than a deposit. At Glenside Finance, we look for an amount appropriate to the individual customer’s circumstances and also the age, mileage and value of the vehicle, with a minimum amount being 5% of the purchase price.
Customers will need a full UK/EU driving licence with no serious convictions. This is also used as proof of identity and current signature.
Limited companies will need a guarantor.
As a responsible lender we follow a ‘Treating Customers Fairly’ policy, and we therefore must establish that any new loan is appropriate and affordable for our customers. Bank statements from both the business and director may be requested to establish financial stability and affordability.
A certificate of comprehensive insurance will be required.
Advantages of Finance Lease
- Finance Lease gives business customers use of an asset of newer, higher specification than the could otherwise buy outright
- The cost of the asset is paid by monthly instalments rather than a large upfront investment
- The cost is spread over a period of time and paid by fixed monthly instalments that will not increase – even if bank interest rates rise
- Tax advantages – VAT is payable on the rentals, not the purchase price, while rentals may be offset against taxable profit (special rules apply to cars)
- Claim up to 100% of the VAT on commercial vehicles, and 50% on cars (subject to being VAT registered)
- Flexible repayment structures are available, tailored to match your company’s cash flow
Disadvantages of Finance Lease
- The agreement is secured against the asset: therefore if you don’t pay, the asset may be repossessed
- Non-payment can negatively affect the credit rating of both the business and the guarantor
- The finance company are the legal owners of the asset, and you will not own it
- The asset is not protected if you or your company are made bankrupt
Our speciality is providing vehicle and asset finance to people with poor credit, defaults, CCJs or ex-bankrupts. We provide Hire Purchase for cars and Leasing for vans. We do not have any mileage restrictions on our Hire Purchase or Lease Agreements.
At Glenside Finance, we promise to treat you as an individual and look at your application personally rather than using a computerised credit scoring system. We aim to work with our customers to provide car finance packages which are affordable and straightforward.
If you want to find out more about our options for poor credit car finance then call us on 01329 849434 to speak to one of our representatives today.