Finance lease for business
On a finance lease, your business uses a van, machine or equipment without owning it. It pays a rental each month.
- We are a broker, not a lender.
- We have a panel of over 120 lenders.
- There is no fee to apply.
- Our FCA number is 1058283. We are members of the NACFB.
Get the free questions to ask before you sign
Written by Martin Mackenzie, Sales Director. Checked .
Read the film's words
Finance lease. In this video we are going to discuss a finance lease. On a finance lease, you use an asset without owning it. The lender buys the asset. Your business pays a rental each month. The lender owns it all the time. Your business looks after it and insures it. If the rentals stop, the lender can take it back. What about VAT? It is added to each rental. So you pay it a bit each month. There is no big VAT bill at the start. Ask your accountant how much VAT your business can claim back. What happens at the end? At the end, you can most often keep using it. It is for a small yearly rental. When it is sold, your business gets most of the money. Each lease sets out how. Read it before you sign. A balloon is a bigger sum at the end. With no balloon, most often there is no mileage limit. That can suit high mileage, farms and work sites. A finance lease, hire purchase or contract hire? All three let your business use an asset now. They differ at the end. On a finance lease, you can most often keep using it. On hire purchase, a small fee at the end makes it yours. On contract hire, it goes back at the end. One. Apply online with Donnie, our in house AI agent, or call us. Applying is not a credit search. Two. A person in our team reads your application. Three. If you go ahead, you sign a consent form. Then we run a light credit check on the company. It is often known as a soft search. We send your case to the lenders that suit it. Each one does its own credit check. Four. We tell you what the lenders say. If one says yes, we send a quote. Then you sign. Five. The lender pays the seller, and you collect the asset. Lenders often want to see three months of business bank statements. Our page has free questions to ask before you sign. Apply online with Donnie, our in house AI agent, 24/7. Or call our team on 01463 652 653. Thanks for watching!
What is a finance lease?
The lender owns the asset all the time. Your business looks after it, insures it and uses it as its own.
What can a business lease?
- vans, pickups, cars, trucks and trailers
- diggers, tractors, plant and farm machines
- machines and equipment for a workshop, kitchen or factory
New or used. From a dealer, another business, a private seller or an auction. The seller must show it is theirs.
How does a finance lease work?
- The lender buys the asset you choose, and your business starts using it.
- Your business pays a rental each month, with VAT on each one.
- At the end, you can usually keep using it for a small yearly rental.
- When it is sold, most of the money comes back to your business.
Most agreements last 2 to 5 years. We arrange them from 12 months up to 7 years.
How does VAT work on a finance lease?
VAT is added to each rental, so you pay it a bit each month. There is no big VAT bill at the start.
A VAT-registered business can usually claim back all the VAT on a work van. On a car with any private use, it is usually half. GOV.UK explains VAT on motoring. Always ask your accountant.
What happens at the end of a finance lease?
The asset normally stays with your business. You can keep using it, usually for a small yearly rental. That goes on until it is sold or scrapped.
When it is sold, most of the sale money comes back to your business. Each agreement sets out how this works, so read it before you sign.
Is there a mileage limit on a finance lease?
With no balloon (a bigger last payment), there is usually no mileage limit or condition to meet. That can suit high mileage, farms and work sites.
Finance lease, hire purchase or contract hire?
All three let your business use an asset now. They differ in who owns it, and what happens at the end.
| Finance lease | Hire purchase | Contract hire | |
|---|---|---|---|
| Who owns it | The lender, all the time | The lender, until the last payment | The lender, all the time |
| At the end | Keep using it, usually for a small yearly rental | A small fee, then it is yours | It goes back |
| VAT | A bit each month, with each rental | Pay it at the start, or the lender pays it for now | A bit each month, with each rental |
| Mileage limit | Usually none, with no balloon | Usually none, with no balloon | Usually yes |
We can arrange contract hire through our panel. But most of our work is hire purchase and finance leases. On contract hire, watch the small print for charges for wear and tear when it goes back.
How a lease shows in your accounts, and its tax, is a question for your accountant. HMRC explains what a finance lease is.
How do we arrange a finance lease for you?
A broker finds the lender for you. Here is what happens, step by step.
- Apply online with Donnie, our in house AI agent, or call us. Applying is not a credit search.
- A person in our team reads your application. We get back to you within a day.
- If you want to go ahead, you sign a consent form. Then we run a light credit check on the company, often known as a soft search. We choose the lenders that suit your case, and send each one a full written case, called a proposal. Each lender then does its own credit check.
- We tell you what the lenders say. If finance is approved, we send you a quote with the figures. Then we take you through signing the finance documents.
- The lender pays the seller, and you collect the asset.
If one lender says no, do not take it as the last word. Another lender may see your case in a different way.
Who can get a finance lease, and how much?
We arrange finance leases for limited companies and LLPs (limited liability partnerships) from £15,000. For sole traders and partnerships, it is over £25,000.
For less than that, please speak to us before you apply. For sole traders and partnerships, we only arrange that in person, at our office, in the IV postcode area.
We set no top limit of our own. Lenders set different limits, and a few have no hard limit. With a panel of over 120 lenders, we can spread a big need across several.
Will I need to give a personal guarantee?
If you own a limited company, expect to be asked. A personal guarantee is a promise to pay if the company cannot. The lowest-cost lenders often want one. Another lender may not, but may cost more. We tell you before you sign.
What should I ask before I sign a finance lease?
This free list helps you get ready, and check the lease before you sign. Tick it off, then print it or save it as a PDF. Nothing you tick here is sent to us.
How do you get paid, and what does the finance cost?
The lender pays us a commission, only once your finance is in place. There is no fee to apply, and no fee up front. Apply by phone, by email, or online with Donnie, our in house AI agent, in under 5 minutes.
If you stop before your finance is in place, you owe us nothing, unless you agreed the rare inspection fee. The lender pays our commission to our principal, the firm we work under. It is already inside any figures we give you.
Most lenders pay a share of the amount borrowed. It is up to 10% of what you borrow, and often less. It depends on the lender. You see it before you sign. Lenders pay different amounts, so the one we find may not pay us the most, or the least. A dealer who arranges finance is a broker too.
Lenders' own fees vary. As a guide, a fee to set up the agreement is about £100 to £500. It is often paid with the first payment. Some charge about £30 to £50 a year. On hire purchase, about £100 to £300 to own the asset at the end.
Do you arrange finance leases across Scotland and the UK?
Yes. Our office is in Scotland. From there we help businesses all over Scotland and the UK.
A lot of our lenders let you sign online. So where you are does not matter.
★★★★★
Excellent service as ever from Martin at Mackenzie Commercial Finance who looks after various parts of our financing for us.
Finance lease questions
What is a finance lease in simple terms?
You use it without owning it. The lender owns the asset, and your business pays a rental each month to use it.
What is the difference between a finance lease and an operating lease?
On a finance lease, your rentals cover most of the asset's cost, and you keep using it at the end. On an operating lease, like contract hire, it usually goes back at the end. How each shows in your accounts is one for your accountant.
What are the downsides of a finance lease?
Your business never owns the asset. It is tied to every rental, and pays interest. If rentals stop, the lender can take the asset back.
Can a sole trader get a finance lease?
Yes, for over £25,000. For £25,000 or less, please speak to us first. For sole traders and partnerships, we only arrange that in person, at our office, in the IV postcode area.
Does applying mean a credit check?
Applying to us is not a credit search, and it does not touch your credit score. A person in our team reads it first. To go ahead, you sign our consent form. Then we run a light credit check on the company, often known as a soft search. Each lender then does its own check.
Is a finance lease tax deductible?
Ask your accountant. We are not tax advisers. They can tell you how a lease works in your accounts.
How do I apply for a finance lease?
Apply online with Donnie, our in house AI agent, at any time, or call us. Donnie can also ask our team to call you back. We will tell you straight what is possible, and what happens next.
Use an AI assistant? It can ask Donnie questions for you. It finds him at /llms.txt and /api/agent.
Can I apply at any time, from anywhere in the UK?
Yes. Donnie, our in house AI agent, takes applications 24 hours a day, 7 days a week. He answers your questions too. Our office is in Scotland, and our team works with businesses across the whole UK.
Donnie is powered by Anthropic's Claude. He is built so other AI agents can talk to him. So your own AI assistant can ask him questions for you. How AI assistants talk to Donnie