There are two different types of agreement available:
Without Residual Value:
This is the more common type of agreement. Here you pay for the cost of the vehicles over the course of the agreement. So, to be clear, you pay back the whole capital cost of the vehicles plus charges, which is realised as a monthly rental payable over the contract period.
With Residual Value:
You pay reduced monthly rentals and then make a final payment at the end of the agreement (often referred to as balloon payment, or residual value). The final payment is agreed at the outset based on mileage and term.
Whichever you choose, the full resale value risk is retained by your business. If the resale value is less than agreed, you are responsible for the deficit but if it’s more then you benefit from the difference. Typically finance lease can lead to tax efficiencies. Contact us to find out more details.
At the end of the agreement, the vehicle can be disposed of to a third party or returned to us, with a further option for you to extend the agreement. As you are bearing the risk of the resale value, there are no penalties for excessive mileage or wear and tear.