A finance lease, is a type of lease agreement used for financing assets, such as technology, machinery, furniture and equipment.
In a finance lease, the lessor (the one providing the financing) retains ownership of the asset and the lessee (the one using the asset) makes periodic rental payments over the term of the lease.
Under a finance lease, the lessee has the right to use the asset for the duration of the lease but does not have the right to sell or transfer ownership of the asset. With the final obligation at the end of the lease you can:
See below for more information on end of term. There are other leasing services such as Hire Purchase and Operating Leases to consider.
There are several reasons why an organisation would use a finance lease to invest in assets, including:
Taking out any commercial finance agreement such as a finance lease should be approached with caution. Before entering into a finance agreement such as this, it is important to consider:
We aim to arrange finance agreements that are affordable and enhance your financial strategy (but we are not aware of your full circumstances), but in the unlikely event that you cannot keep up with repayments on your lease, you may lose the asset. It is important to carefully consider the terms and conditions of the finance lease agreement to take full advantage of the benefits of finance leasing and minimise any potential risks.
*If we hold a trading agreement with the original introducer, the equipment will be sold to the introducers first.
A finance lease is a type of leasing arrangement in which the finance company purchases the asset and then leases it to the organisation for an agreed-upon period. At the end of the lease term, the organisation may have the option to purchase the asset for a pre-determined amount or return it to the finance company. A finance lease differs from other financing options in that it provides organisations with the use of the asset without the responsibility of owning it outright.
The types of assets that can be leased vary, but they typically include equipment, vehicles, and other capital assets that a business needs to operate. The process for acquiring a lease typically involves filling out an application, providing financial information, and submitting a credit check. You can view what documentation is required by a funder to support your application here.
The typical repayment terms for finance leases vary depending on the finance company, the asset being leased, and the terms of the lease agreement. Repayment terms may range from several months to several years. Compared to other financing options, finance leases typically have lower monthly payments and may provide more flexible repayment terms.
The eligibility requirements for finance leases vary depending on the finance company, but they may include minimum credit scores, revenue thresholds, and other financial criteria. You can view what documentation is required by a funder to support your application here.
A finance lease can help a business acquire the assets it needs to grow and succeed by providing access to the latest equipment, vehicles, or other assets without the need for a large upfront capital outlay. This can help businesses conserve their cash and maintain a strong financial position.
There may be fees associated with finance leases, such as application fees, maintenance fees, and termination fees. There may be a final obligation at the end of your agreement to return the equipment to the funder in full working order. This can come with an associated cost so it’s important you consider and understand the terms. All fees will be communicated to you through the terms and conditions of your agreement. It is important you make sure you agree to these before signing any finance agreement.
