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A finance lease is a tax efficient and flexible way of purchasing a car. As with Contract Hire this way of funding is more suited to a business customer. The flexibility comes from the ability to choose between two options. The first being that they can spread the total cost of the vehicle, which includes interest charges over a certain period leaving no further money to be paid. The second option is simply to offset an amount to the end of the term with the result being that the customer would benefit from lower monthly repayments. The final deferred rental would be based on the anticipated, projected resale value of the vehicle ...

The responsibility for selling the vehicle at the end of its contract term lies with the customer. This means that there could be a profit depending upon the amount of finance still outstanding.

In terms of businesses, while the ownership of the vehicle remains with the leasing company for the period of the contract, the vehicle does actually appear on the company's balance sheet. As with Contract Hire a proportion of the rentals paid can be offset against taxable profits

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