Leases or Lease Purchase agreements require an initial payment as a multiple of the rentals.
Leases or Lease Purchase agreements require an initial payment as a multiple of the rentals. The outstanding balance is then collected in periodic instalments or rentals. The number of outstanding rentals is typically the number or rentals that need to be paid less the number paid in advance.
This would thus leave a period at the end of the agreement where no payments are paid, known as the "terminal pause". It is possible however to spread the outstanding balance over the remaining period; this is known as spread rentals.
For example, in the case of a 3 year lease with monthly rentals and an initial payment of 3 advance rentals:
If the pause is spread, as opposed to terminal, the outstanding balance is collected over more payments. As there are more payments, the rental will appear to be less. However, as you are taking longer to repay the agreement, more interest will be charged. It is therefore very important that when comparing Lease (or Lease Purchase) quotes from different finance companies, you are certain that any differences in the rentals are due to one company being more competitive and not due to the fact that they are spreading your payments (and actually charging more interest)
Use our Online Enquiry Form on the right hand side of this page or Contact Us on 0800 0735353 and let our professional team find you a competitive UK Commercial Asset Finance Deal.
