Finance Lease is a rental agreement that, whilst never leading to full ownership, could give you a share of any future resale value. There are two types of Finance Lease agreements – ‘balloon’ repayment and full payout.
"Balloon" repayment finance lease
How much do I pay and when?
‘Balloon’ repayment is when you defer a proportion of your vehicle’s value until the end of the agreement, leaving you with lower monthly rental repayments. Once you’ve selected your initial rental, there are three decisions to make that will affect your monthly rental repayments:
- Your payment period: Choose between 18 and 48 months.
- Final balloon repayment: Agree an amount to defer until the end of the agreement.
- Mileage per year: Choose how many miles you expect to drive each year (if you exceed this it will affect the resale value).
What benefits does 'balloon' repayment offer me?
- LOWER MONTHLY RENTALS: Lower monthly rentals than a full payout agreement
- EXCESS SALES PROCEEDS: An opportunity to share in any excess sales proceeds which may settle or contribute to the final ‘balloon’ repayment. The sales proceeds are not guaranteed to cover the final ‘balloon’ repayment
- VAT: Depending on levels of business use, an element of the VAT on rentals may be recoverable by VAT registered businesses
- CLAIMABLE AS EXPENSE: A proportion of rentals may be claimable as an expense against taxable profits
At the end of your agreement you can choose from one of two options:
- Sell the vehicle on behalf of ŠKODA Financial Services to a selected 3rd party and then settle the final ‘balloon’ repayment. You can then share in any excess sales proceeds.
- Settle the ‘balloon’ repayment and then enter into a secondary rental period, paying an annual rental and retain the use of the vehicle.
Full payout finance lease
How much do I pay and when?
Full payout is when you spread the amount financed equally over the term. Once you’ve agreed your initial rental, there are two decisions to make that will affect your monthly repayments:
Your rental repayment period: Choose between 12 and 60 months
Mileage per year: Choose how many miles you expect to drive each year (if you exceed this it will affect the resale value).
What benefits does full payout offer me?
- NO FINAL REPAYMENT: There’s no large final repayment at the end of the agreement
- EXCESS SALES PROCEEDS: You’ll have an opportunity to share in any excess sales proceeds
- CLAIMABLE AS EXPENSE: A proportion of rentals may be claimable as an expense against taxable profits
- VAT: Depending on levels of business use, an element of the VAT on rentals may be recoverable by VAT registered businesses.
At the end of your agreement you can choose from one of two options:
- Sell the vehicle on behalf of ŠKODA Financial Services to a selected 3rd party. You can then share in any excess sales proceeds.
- Enter into a secondary rental period, paying an annual rental and retain the use of the vehicle.