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Funding Methods -
Finance Lease
Risk: You assume risk.
Market Share: 5% and growing.
Popular With: Companies as an alternative to Contract Hire.
How it Works:
The crucial difference
from Contract Hire is that Finance Lease rentals are not necessarily
dependent on a predetermined vehicle life cycle - and hence residual
value. The lessee may pay back the entire capital cost of the vehicle plus
charges over a period of time, or may agree a balloon payment to reduce
the monthly rental - but never takes ownership. This method is
particularly useful for fleets with wide variations in operating
requirements. Despite the fact the operator does not assume ownership, he
does take residual value risk.
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