What is Finance Lease?
Finance Lease is a flexible leasing option commonly used by businesses that want lower monthly rentals or
greater control at the end of the term.
Unlike Contract Hire, the customer carries the resale risk, making this suitable for users who understand or can
manage used vehicle values.
Well‑suited for commercial vehicles and fleets requiring flexible structures.
How does it work?
The finance company purchases the vehicle and leases it to your business for a term between 24 and 60 months.
Two structures are available: full‑payout (higher monthly rentals, no balloon) or balloon lease (lower monthly
rentals with a large final payment based on forecasted resale value).
VAT‑registered businesses can reclaim 50% of VAT on finance rental and 100% of VAT on maintenance if
included.
Vehicles are supplied new through franchised UK dealers with full manufacturer warranty.
What’s included?
Use of the vehicle throughout the contract.
Road Fund Licence (RFL) included for the full term.
Optional funder‑maintained packages covering servicing, repairs and tyres.
Customer‑maintained agreements require you to handle all servicing costs.
End of contract responsibilities
Unlike Contract Hire, the vehicle is not simply returned.
You must sell the vehicle to an unrelated third party and use proceeds to settle any balloon balance.
If the sale price exceeds the balloon amount, the surplus may be retained (subject to funder rules).
If the sale price is lower than the balloon, your business must pay the difference.
Some funders allow refinancing the balloon or continuing on a peppercorn rental.
The broker’s role
Explains the differences between full‑payout and balloon structures.
Presents quotes from multiple leasing companies to find competitive rentals.
Arranges sourcing, documentation, credit approvals and delivery.
Supports end‑of‑term processes including disposal guidance and refinancing options.
Benefits of Finance Lease
Lower monthly rentals compared to Contract Hire.
Flexible structures to match cash flow needs.
Possibility of retaining profit if the vehicle sells above expected value.
No set mileage limits for many funders, useful for high‑mileage operators.
Downsides of Finance Lease
Business carries all resale risk – negative equity can occur if market values fall.
No automatic return option at end of term.
No early termination unless the vehicle is sold.
Balloon amounts may not reflect real‑world resale values, especially during market volatility.
Target market
Businesses confident in managing vehicle disposal or working with trade buyers.
Skyfleet Limited is a company registered in England and Wales with company number 03463255. VAT registration Number: 680053649.
Registered office: Unit 3, High House Business Park, Kenardington, Kent, TN26 2LF. Skyfleet Limited is a credit broker, not a lender. We work
with a selected panel of lenders. Skyfleet Limited is authorised and regulated by the Financial Conduct Authority, for credit related regulated
activities. Telephone: 01233 730260 Email: sales@skyfleet com Website: www.skyfleet.com
High‑mileage operators such as trades, logistics and field‑based teams.
Companies wanting flexible lease structures and lower monthly rentals.
Alternative options
Business Contract Hire – fixed rentals and no disposal responsibility.
Lease Purchase – ownership at the end but no return option.
Hire Purchase – fixed instalments and guaranteed ownership.