Finance Lease for Vans, Vehicles & Equipment
With a finance lease, the lender buys the asset and your business rents it for an agreed term. You get full use of it from day one, pay fixed monthly rentals with VAT added to each one, and avoid a large deposit or VAT bill at the start. It’s a popular choice for van fleets, plant and equipment that your business replaces on a regular cycle.
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How a finance lease works
1. Low upfront cost
Usually one or a few rentals in advance, rather than a deposit plus the VAT on the full price.
2. Fixed monthly rentals
Rentals are fixed for the term, typically 2 to 5 years, with VAT charged on each one.
3. End-of-term options
Extend the lease at a low rental, or sell the asset to a third party and usually receive most of the sale proceeds.
Case study
Three new Renault Trafic vans on a finance lease
GA Commercial in Walsall wanted to stop renting vans and build its own fleet without tying up cash. We arranged three new Renault Trafic vans on a finance lease over 48 months.
- Just one monthly rental upfront (a 1 + 47 profile)
- No VAT to pay in one lump at the start
- Proposed and accepted the same day, paid out the same week
Who a finance lease suits
Fleets on a replacement cycle
Van and vehicle fleets you replace every few years, where ownership at the end doesn’t matter.
Protecting cash flow
Businesses that want the lowest upfront cost and no large VAT payment when the asset arrives.
Equipment that dates
Technology and machinery that is better upgraded than kept for the long term.
Hire purchase vs finance lease
Both spread the cost of a vehicle or machine over monthly payments. The main differences are ownership and VAT.
| Hire purchase | Finance lease | |
|---|---|---|
| Who owns it? | You, once the final payment and any option fee are paid | The lender. You use it for the term but don’t take ownership |
| VAT | Usually paid upfront on the purchase price, then reclaimed if you’re VAT-registered. VAT deferral is sometimes available | Added to each monthly rental, so there’s no large VAT bill at the start |
| Upfront cost | A deposit, often around 10%, plus VAT | Typically one or a few rentals in advance |
| On your balance sheet | Yes, as an asset you’re buying | Usually, under current accounting rules. Check with your accountant |
| End of the term | The asset is yours | Extend at a low rental, or sell the asset to a third party and usually receive most of the proceeds |
| Balloon option | Yes, to lower monthly payments | Yes, a final rental can be structured in |
This is a general guide. Your accountant can confirm the tax and accounting treatment for your business.
Things to consider
You don’t own the asset
The lender owns it throughout. If you want to own the asset outright, hire purchase may suit you better.
Total cost
Over the full term, total rentals can exceed the asset’s purchase price, and you must keep up the rentals for the whole term.
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Case Studies & Guides
Explore our latest case studies and finance guides.
Finance Lease FAQs
What is a finance lease?
A finance lease is a rental agreement where the lender buys the asset and your business pays fixed monthly rentals to use it for an agreed term. You don’t take ownership, but you get full use of the asset.
How does VAT work on a finance lease?
VAT is added to each monthly rental instead of being paid on the full price at the start. If you’re VAT-registered, you can usually reclaim the VAT on each rental.
What happens at the end of a finance lease?
You can usually extend the lease at a low, often annual, rental, or arrange for the asset to be sold to a third party and receive most of the sale proceeds as a rebate of rentals. The exact options depend on the lender.
Can I lease used vans and equipment?
Yes. Many lenders lease used assets as well as new. The age of the asset at the end of the term affects which lenders we use.
Are finance lease payments tax-deductible?
Lease rentals are often treated as a business expense, but the treatment depends on your business and current accounting rules. Your accountant can confirm.
Is a finance lease the same as contract hire?
No. With contract hire you hand the vehicle back at the end and the lender takes the risk on its value, often with maintenance included. With a finance lease your business shares in the value at the end and is responsible for the asset during the term.
Should I choose a finance lease or hire purchase?
A finance lease suits businesses that want low upfront costs and don’t need to own the asset. Hire purchase suits businesses that want ownership. We’ll set out both for you.
Are you a lender?
No. Boost Finance is a credit broker, not a lender. Boost Asset Finance Ltd is an Appointed Representative of EFT Finance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 667290). We work with a panel of lenders to find the right finance for you.
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