What is an Operating Lease?
An Operating Lease is a very basic form of leasing, you pay fixed monthly Rentals based on the Initial Rental, mileage and residual value over a period of 12 to 60 months. You do not own the vehicle for the duration of the Operating Lease and when the lease is finished the car is returned with no option to buy.
Key points of an Operating Lease
- Contract lengths range from 12 to 60 months
- Allows for accurate budgeting over the term of the lease
- For some VAT registered businesses, 100% of the VAT in the Rentals is reclaimable for vans and 50% for cars
- Vehicle is delivered to you and collected from you when you hand it back
- Appears off Balance Sheet
Things to consider about an Operating Lease
- You will never own the vehicle
- Road Fund Licence is supplied only for the first year
- You will be charged if you return the vehicle damaged (in accordance with BVRLA "Fair Wear & Tear" Standards) or over mileage