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Finance Lease

A finance lease is simply renting the asset over an agreed period of time and you usually remain responsible for the maintenance.

What is Finance Lease?

A finance lease is simply renting the asset over an agreed period of time and you usually remain responsible for the maintenance. Funding up to 100% of the capital cost of the asset. VAT is paid on the rental payments rather than the overall purchase price. At the end of the lease, you have the option to extend the lease or request to sell the asset at fair market value and receive the majority of the sale proceeds.

One of the key features of finance leasing is that the customer takes on most of the risks and rewards of ownership but never actually own the asset. In practice, this means that a finance lease looks and acts a lot like hire purchase but they’re different on the balance sheet. 

Finance leases are available for all asset categories including vehicles, office equipment and industry-specific machinery.

How a finance lease works

The assets are purchased from the supplier by the funder and remain the property of the funder. You will then be able to use and retain possession of the asset, paying its full cost amount in fixed rental payments over the term.

At the end of the term, you can simply hand the asset back to the finance company.

However, you may be offered a secondary period lease for a nominal amount, known as a ‘peppercorn’ rental – essentially starting the lease again.

A third option is selling it to a third party that isn’t related to your business, at a fair market value.

If you sell it for more than the final payment of the asset, you will be able to keep a pre-agreed percentage of the net sale profit. However, if it’s worth less, you will be invoiced for the difference.

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Benefits of using a finance lease

Some benefits of using a finance lease are:

  • Minimal cost upfront.
  • Fixed regular payments.
  • 50% of VAT can be reclaimed
  • 100% of VAT for maintenance can be reclaimed.
  • Choice to retain use of the asset at the end of the facility term.
  • Additional lines of finance may not affect core banking arrangements.

Is it suitable for your business?

A finance lease facility is good for businesses who want to use equipment that has a short usage life, such as IT equipment, or for those who are in need of expensive equipment without wanting to pay the full amount upfront.

It’s an alternative to purchasing equipment outright that also offers potential cashflow benefits as you can make payments from income generated by the equipment.

Things to consider for finance lease

Some things to consider before proceeding with finance lease are:

VATYour deposit will be lower as the VAT is spread over the term of the agreement rather than an upfront cost

Contract hire: Have a look at our specialist vehicle platform for other vehicle leasing options for your business

Maintenance: Depending on the type of leasing product you choose, you may be responsible for maintenance of the asset

End-of-lease: Depending on the lease, you can either return the asset, sell it to a third party, sell it on behalf of the funder or keep the asset and pay continuing rentals.

How to apply for a finance lease

MAF Finance Group can compare finance offerings from a wide panel of lenders to find the best option for you.

If you would like to get a quote or need further information, simply fill in the form and we will contact you. If you want to speak to someone directly, you can call us on 0115 958 6872 and a member of our team will be happy to speak to you. Alternatively, email us at

Other Products We Offer

Additional products in our extensive range of Financial Solutions

Asset Refinance

Asset refinancing is a way of raising capital against assets you hold on your balance sheet.

Asset-Based Lending

Asset-based lending (ABL) is a type of finance in which a business can use its assets, such as inventory and property to release working capital.

Hire Purchase

Hire purchase allows your business to buy an asset by spreading the cost over a fixed period of time with regular monthly instalments.

Invoice Finance

Invoice finance provides early access to the funds owed to you in unpaid invoices if you find your business waiting for customers to pay for your services or products.

Unsecured Loans

An unsecured loan is a way of injecting cash into your business if you need help with working capital or general expenses.

Asset Finance

Asset finance allows you to purchase an asset for your business by spreading the cost over monthly repayments meaning you won’t need to use your working capital.

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