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Lease finance or purchase lease

Lease finance or purchase lease

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Hi everyone,

I have to decide whether the following company car lease is a  purchase lease or a lease finance 

Please see the below details:

- £5000 deposit

- 36 monthly payments of around £440

-and a final repayment of £10500 if lesee want to keep the vehicle

-the car cash price around 25000

I believe this is a Finance Lease but what makes me confused is that the final payment that the lesee will make in order to keep the car is a substantial amount compared to 25000 the cash price 

What is your opinion? Any advise will be very welcomed. Thank you




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By petlow
11th Dec 2018 20:12

Hi Ramona, not certain why you need to make this decision: presumably it's to determine whether the car should be capitalised in the company accounts....remember substance over form.....
Plus the option to acquire the vehicle at the end of the lease period would suggest that this asset is fully under the control of the - in which case the asset should be capitalised.

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to petlow
11th Jan 2019 18:33

Thank you for your reply. Indeed the main reason why I need to make this decision is because I want to find out whether capitalising the car is the right thing to do.Also when is the right time to capitalise it: when the car was purchased under the lease agreement OR just at the end of the lease when the company director decided to fully acquire the car from the lease supplier?(this will be in about 2 -3 years when the lease comes to an end. Thank you in advance for a potential reply.

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