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.

Courteney Way

Marketing Director

Courteney Way is the Marketing Director at Funding Options, raising the profile of the fast-growth fintech within the ecosystem and building brand awareness as a vital provider of finance solutions to SMEs. For the past ten years, she has worked across UK, European and South African markets and In 2022, she was recognised as part of Women in Fintech Powerlist.

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Tide acquires Funding Options

Tide, the leading digital business banking platform, has today announced it will acquire Funding Options, a leading UK marketplace for business finance, subject to FCA approval. Founded in 2011, Funding Options is a leader in SME credit intermediation and has been recognised as a fast-growth scale-up, and has featured in the FT1000, the Financial Times’s annual list of Europe’s fastest-growing companies.

29 Nov 2022

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Survey reports fatigue among business owners

The survey of 1000 UK SMEs, conducted by Funding Options and Censuswide, found less than half of business owners are 'very confident' of surviving the next six months (42%)

27 Sept 2022

Craft beers and ales for national beer day

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National Beer Day 15th of June

National Beer Day Britain takes place on the 15th of June, established in 2015 by Jane Peyton (founder of the School of Booze). Introduced by the Dutch in the latter half of the fourteenth century, beer is the most popular alcoholic drink in the United Kingdom.

15 Jun 2022

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Credit control email templates

Having credit control email templates and processes in place can help you get paid quicker. Here's how to write a credit control email.

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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 may 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.

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