A finance lease is a type of asset lease. How does it work and how will it be beneficial to your business? Find out more below.
FinCred CF is an expert in finance leases, and as a broker can help you find a finance lease to suit your business.
What is a Finance Lease?
A type of leasing agreement whereby you effectively rent the asset over the agreed leasing period in exchange for monthly payments. The leasing agreement is usually for a longer period and is often linked to the lifespan of the asset. The asset that you are leasing is often shown on your company balance sheet as an asset, which can improve your financial strength; however, your company does not actually own the asset and you are usually obliged to declare the leasing arrangement under your company liabilities.
When considering what sort of lease to take out for a business asset, you have the option of a finance lease or an operating lease.
What is the Difference Between an Operating Lease and a Finance Lease?
With a finance lease, there is an option to take ownership of the asset at the end of the lease period, and fully enjoy the rewards of ownership. This would not be possible with an operating lease. When it comes to maintenance, your business would be responsible for the maintenance of the asset. With an operating lease, the lessor is the one responsible.
There are also differences in how these leases are recorded in your company’s accounts. A finance lease is a long-term arrangement with a variety of options available, including receiving a majority percentage of the asset sale price if the asset is sold to a third party at the end of the lease agreement.
Is a Finance Lease Suitable for My Business?
If you are looking to spread the cost of an asset over a long period without actually owning it, this can be a suitable option for your business. Finance leases are typically over a longer period, similar to the period of a Hire Purchase agreement.
At the end of the lease agreement, you may be presented with different options, for example extending the leasing period, upgrading to the newest model or version of the leased asset, or purchasing the asset with a final payment. Finance leases are a great option if you require regular updating of assets, such as fleets of vehicles.
Am I eligible for a Finance Lease?
Finance leasing companies will consider a number of variables when deciding your eligibility. These include the financial strength of your company, your ability to meet repayments and the asset which you are proposing to lease. For FinCred CF to consider your enquiry, you will have to be a UK registered private limited company, a public limited company, or a limited liability partnership. Finance leases are an ideal solution for businesses operating across a range of industries. Whether you have a good credit history or have adverse credit, you will be considered by our panel of specialist providers.
How Much Does a Finance Lease Cost?
The cost of a finance lease can vary depending on the financial strength of your company, your credit history, the period over which you require the asset to be leased and the type of asset you are leasing.
The cost will also be affected by the option you choose at the end of the lease agreement.
Working with Fincred, Your Partner in Finance Leasing
Finding the right finance lease agreement for your business isn’t always easy. But as an experienced broker in finance leasing (as well as other types of leasing) we can help guide you through the process and provide any advice you may need.
We understand asset leasing can be difficult, but it doesn’t have to be. Find out what we can do for you today by getting in touch.
We work in partnership with our sister company, FinCred IS, to offer you surety bonding and trade credit insurance policies which can complement and facilitate your finance lease agreement.
UK Wide Industry Statistics
Total value off all sales financed in the UK - £bn
Domestic invoice discounting - £bn
Total number of asset based lending clients
Domestic invoice discounting clients
Please Get In Touch
If you wish to speak to a broker please fill out the form on the ‘Contact Us’ page by clicking the button below.