The crucial difference from contract hire is that under a finance lease the lessee retains an element of risk.
The transaction is shown on the lessee's balance sheet and they are also responsible for maintaining the vehicle during the period of lease and bear the residual value risk. The value of the vehicle is amortised in the rentals and the lessee receives most of the value of the vehicle on sale at the end of the contract.
Sometimes a lower rental is paid during the lease period with a balloon rental paid at the end at a value estimated to equate to sales proceeds. A Finance Lease can therefore be an excellent product for those clients wanting a little more flexibility in the operation of their vehicles or who would prefer an alternative to traditional Hire Purchase.
To reduce your exposure, we can manage the disposal on your behalf, using our specialist knowledge and expertise to maximise the sale proceeds and minimise your risk. Alternatively, you can introduce a third-party purchaser to us at the end of the agreement.