Operating Lease:
Provides for the renting of the vehicle and includes financing of the vehicle over a fixed term.
At the end of the lease term you return the vehicle to the finance company. Generally, you have the option to buy the vehicle at market value.
This type of finance facility is popular for companies operating a fleet of vehicles.
Benefits:
- You can access the latest vehicles without the risk associated with ownership
- The full lease payment is tax deductible where the overall use of the vehicle is for income producing purposes
- As the responsibility for maintenance falls with the financial institution you are not exposed to unexpected high maintenance costs
- Fixed payments and interest rates provides certainty
Considerations:
-
There is no pre-agreed purchase price for the motor vehicle (note this could be advantageous if the value of the vehicle has fallen significantly)
- You cannot claim the vehicle depreciation
