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Finance Lease

Finance lease is a popular agreement for businesses needing cars, vans and commercial vehicles where contract hire is not suitable. It offers flexibility and tax advantages to eligible companies who require one or more vehicle.

As part of a finance lease agreement you can choose to pay the entire cost of the vehicle, including interest charges, over an agreed period. Alternatively, you can choose to pay lower monthly rentals, with a final payment based on the anticipated resale value of the vehicle (otherwise known as the 'balloon payment'). Throughout the agreement the vehicle remains the property of the leasing company.

This type of agreement is only available to business customers – including limited companies, self-employed people and sole traders; it is not available to private individuals. It is a particularly popular option for businesses because of the significant tax advantages.

How does Finance Lease work?

If your company chooses to take out a Finance Lease on a new or used vehicle, you will be hiring it for a specified period of time (e.g 2 years) and make regular monthly payments to rent it.

Your business will be able to use the car or van without facing the high upfront cost of a new vehicle, handle the administration of the vehicle, and have the assets show on your company’s balance sheet.

At the beginning of the lease usage parameters for the vehicle are agreed. Providing these restrictions are met, monthly payments and interest rates are fixed for the duration of the contract.

If yours is a VAT registered company, you can reclaim between 50% and 100% of the VAT payments, depending on whether you are renting a car or commercial vehicle. If your company is not VAT registered, you can choose to spread the VAT costs across the term of the lease by incorporating it into your monthly rental. Your payments can usually be offset against taxable profits (special rules apply to cars).

Is my company eligible?

Finance Lease is available to sole traders, limited companies, partnerships and self-employed people who are financially eligible.

What happens at the end of the contract?

At the end of the lease you do not need to sell the vehicle. You can continue to use the vehicle by paying a peppercorn/secondary rental from as little as £10.00 + VAT.

Alternatively, you can sell or part exchange the vehicle, allowing your company to benefit from any available equity from the sale.


  • Low monthly costs and initial outlay.
  • We can offer a number of payment options to suit your cash flow. You can make deferred payments, lowering the monthly rental with a balloon payment at the end of the contract, or you can pay the entire cost in monthly instalments.
  • You can gain access to the latest vehicles that may otherwise be unaffordable.
  • From 50% to 100% of the VAT payments can be reclaimed.
  • You can boost your equity by receiving all the sale proceeds at the end of the finance lease term.

Please note: The above information is for guidance purposes only. As a responsible lender Associated Credits Limited recommends prior to entering into any form of legal contract companies and individuals seek the guidance of an accountant or suitably qualified independent professional advisor.