Understanding Finance Lease
Finance Lease (FL) – Fixed hire agreement over a fixed period, at the end of the agreement, subject to funder, there are options to consider; sell the asset to an unconnected third party for FMV with a retention of an agreed sales proceed percentage (agreed with bank), start to pay annual Secondary period rentals (SPR) or return the asset.
FL with Residual Payment – Mirrors a FL agreement, however there is a lump sum payment known as a balloon payment. The customer is responsible for this payment. Only available on certain assets.
Finance Lease Information
Finance Lease Regulation Features
Suitable Customers
It is important that you know if a product is suitable for you. All finance agreements are subject to underwriting, it is essential that you read and understand any finance agreement prior to signing.
Regulated requirements
- UK Based customers
- Sole Traders purchasing an asset under £25k
- Partnerships (3 or less individuals) purchasing an asset under £25k
- Membership clubs or Trusts purchasing an asset under £25k
- Individual / Director purchasing a vehicle for personal or business use (including High net-worth individuals (HNWI*) purchasing a vehicle under £60,240)
- *(High net worth individual – someone who earns more than £150k per annum or net assets exceeds £500k)
- Over 18 years
- Customers with the ability to repay the agreed rentals.
- Customers who can make payments via direct debit
Unregulated requirements
- UK Based customers
- Sole Traders purchasing an asset over £25k
- Partnerships (3- individuals) purchasing an asset over £25k
- Partnerships (4 + individuals)
- Limited companies. Limited Liability Companies PLCs
- High Net Worth Individual – Asset over £60,240
- Over 18 years
- Customers with the ability to repay the agreed rentals.
- Customers who can make payments via direct debit.
Product Purpose
It is important that you know the purpose of each of the products we offer. By understanding what there are designed for gives you a greater understanding of how they will work for you.
Regulated requirements
The purpose of these products is to provide finance for identifiable equipment where ownership is not the priority.
Predominately supporting agricultural, golf, industrial, construction, haulage & logistics, professionals, IT and many more.
Unregulated requirements
- The purpose of these products is to provide finance for identifiable equipment where ownership is not the priority. Predominately supporting agricultural, golf, industrial, construction, haulage & logistics, professionals, IT and many more
Product Characteristics & Benefits
It is essential that you understand the characteristics and benefits of our products and how they work. They all have both legislative and regulatory differences as well as more practical considerations to consider.
Regulated requirements
- This is a hire agreement, a customer will not get ownership of the asset, they hire it from the funder. Popular choice for customers where usage is more important than ownership.
- Unlimited use of an asset.
- Terms from 24 months – 60 months.
- Heavy commercial assets may have different terms.
- Monthly, quarterly, half yearly & annual payment profiles allowed.
- Can trade in the asset at the end of the agreement to get a new asset again.
- Customers will get immediate use of a business use asset.
- Fixed payments and flexible payment structures allow businesses to match income and expenditure cycles.
- Balloon payment will reduce the rentals (only valid on specific assets)
- Ability to finance the balloon payment at the end of the agreement
Unregulated requirements
- This is a hire agreement, a customer will not get ownership of the asset, they hire it from the funder. Popular choice for customers where usage is more important than ownership.
- Unlimited use of an asset.
- Terms from 24 months – 60 months.
- Heavy commercial assets may have
different terms. - Monthly, quarterly, half yearly & annual payment profiles allowed.
- Can trade in the asset at the end of the agreement to get a new asset again.
- Customers will get immediate use of a business use asset.
- Fixed payments and flexible payment structures allow businesses to match income and expenditure cycles.
- Balloon payment will reduce the rentals (only valid on specific assets).
- Ability to finance the balloon payment at the end of the agreement.
Pricing & Fees
Products have different fees and pricing depending on type, term and regulatory governance it is essential you read and understand any product features relating to pricing and fees prior to signing.
Regulated requirements
- Fixed pricing, interest bearing.
- At the end of the agreement the agreement can be extended into
- Secondary period rentals unless terminated (discuss options with your broker)
- VAT is paid throughout the lifetime of the agreement against each rental.
- Upfront processing/ document fees may apply.
- If selling the asset on, a Rebate fee may apply when terminating the agreement.
- Termination can happen prior to the end of the term however charges may apply.
- Right to withdraw within 14 days applies
- If you select to have a balloon payment, you are responsible for this payment.
- Commission is paid to the broker for this type of introduction, if you wish to know more email compliance@peregrinefinance.co.uk
Unregulated requirements
- Fixed pricing, interest bearing.
At the end of the agreement the agreement can be extended into Secondary period rentals unless terminated (discuss options with your broker) - VAT is paid throughout the lifetime of the agreement against each rental. Upfront processing/ document fees may apply.
- If selling the asset on, a Rebate fee may apply when terminating the agreement.
- Termination can happen prior to the end of the term however charges may apply.
- If you select to have a balloon payment, you are responsible for this payment.
- Commission is paid to the broker for this type of introduction, if you wish to know more email compliance@peregrinefinance.co.uk.
Risks & Considerations
Entering into any financial contract is to be done with due consideration to risk. It is essential you read and understand any financial product prior to signing. If you have any doubt in understanding the risks to you as a customer you must seek clarification from the finance provider.
Regulated requirements
- Missed payments may impact the customers credit rating and result in the asset being repossessed.
- After the withdraw period, customers cannot cancel the agreement without settling off the outstanding payments, fees may apply.
- Not suitable for retail consumers.
- Not suitable if you want to own the asset (consider HP agreements if you want this)
- Additional Security maybe requested by the finance company such as a personal or company guarantees.
Additional charges could apply (some are listed below) - Late payment fees
- Direct debit represented fees
- Settlement charges (standard or new business)
- Termination fees
- Novation charges
Unregulated requirements
- Missed payments may impact the customers credit rating and result in the asset being repossessed.
- Not suitable for retail consumers.
- Not suitable if you want to own the asset (consider HP agreements if you want this)
- Additional Security maybe requested by the finance company such as a personal or company guarantees.
- Additional charges could apply (some are listed below)
- Late payment fees
- Direct debit represented fees
Vulnerability
We have a broad spectrum of customers from SME to PLC businesses, we treat everyone with due care any consideration and it is imperative that our customers understand what they are agreeing, we look to support any customer with additional requirements or needs.
Regulated requirements
- Our customers come first. We want to ensure that you fully understand what you are agreeing to. If you require additional support, you must make your broker aware so they can offer the most suitable support
Unregulated requirements
- Our customers come first. We want to ensure that you fully understand what you are agreeing to. If you require additional support, you must make your broker aware so they can offer the most suitable support.
