What is a finance lease?

A finance lease is a type of commercial lease in which the legal owner of the asset — in this case, a tractor — rents the asset to the user of the tractor for an agreed-upon period. When a lessee enters into this agreement, they have full operating control of the asset. They will have responsibility and assume the risks and rewards that come with owning the asset. For accounting purposes, the lease gives the lessee the same economic characteristics as if they had full ownership of the tractor. The lessee will record the asset as a fixed asset on their balance sheet. In this situation, the lessee will record the interest of the lease payment as an expense. The lesser charges rent in exchange for lending the asset. The lessor retains ownership of the asset but the lessee gains exclusive use of the asset (providing they abide by the terms of the lease). The lessee is obliged to make rental payments that cover the original cost of the asset. There is an obligation to pay all of the fixed rental amounts, sometimes including a percentage of the purchase price of the vehicle at the end of the contract.

What is an operating lease?

An operating lease in contrast is the simplest form of equipment leasing, where the customer doesn't take on the risks and rewards that come with owning the asset (such as maintenance costs). An operating lease or contract hire is a way of renting an asset for your business over a short or medium time frame without taking on any risk. With an operating lease, you can get a tractor hire over a fixed term, with lower monthly payments and without the commitment of ownership.

GoCompare

This quote won't affect your credit score
Dedicated Business Finance Specialist
Get access to 120+ lenders

Start your journey

How much finance do you need?

What is the finance for?

How does it work?

We break down funding barriers with a simple application process that empowers you. Our technology, Funding Cloud, accurately validates your business profile, matching you to the industry’s largest lender network. Funding results are uniquely tailored to each and every business.

See your Funding Options

Tell us how much you need

Tell us how much you need to borrow, what it's for and provide some basic information about your business.

Get an instant comparison

Our smart technology will compare up to 120+ lenders and match you with the right finance options for your needs.

Apply and get your funding

We'll help you through the process from application to receiving your funds.

Our products

Click below to find out more about each of our products

Business Loans

Invoice Finance

Asset Finance

Property Finance

Commercial Mortgages

Working Capital

Business Cards

Financial product information

Representative example*

7.63% APR Representative based on a loan of £50,000 repayable over 24 months. Monthly repayment of £2,252.94. The total amount payable is £54,070.56

*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.

Annual Percentage Rate

Rates from 2.75% APR

Repayment period

1 month to 30 years terms

See your Funding Options

Some lenders on our panel:

Trusted by over 18600 customers

Legal

Get in touch

Disclaimer: Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options will receive a commission or finder’s fee for effecting such finance and insurance introductions.

*Eligibility criteria apply - see Tide website for full details.

Funding Options Ltd is incorporated and registered in England and Wales with company number 07739337 and registered office at 4th Floor The Featherstone Building, 66 City Road, London, EC1Y 2AL.

© Funding Options Ltd · Authorised and Regulated by the Financial Conduct Authority · Reference Number 727867

Business Loans

Sign up to Tide today

Funding Cloud

Funding Options: Advisors

We're hiring!

Business Loans Calculator