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.

Business Bank Current Accounts

A current account is essential for any business – but not all current accounts are the same. While most current accounts allow online and telephone banking, not all come with overdrafts. And many business current accounts come with a range of benefits.

Compare business current accounts

Natwest

Natwest Business Bank Account

Flexible everyday banking for your business:

No minimum monthly charge - only pay for what you use
24/7 Online, telephone and mobile app banking
Dedicated Relationship Manager (turnover and eligibility criteria apply)
Fee-free accounting software from FreeAgent

Account fee

Variable

Bank transfers

Overdraft

Yes

Access

Online

Find out more

Barclays

Barclays Business E Payments

Business bank accounts designed to simplify everyday banking and make managing your money easier, with business banking experts on hand to help, too.

Account fee

£8.50 per month

Bank transfers

Free

Overdraft

Yes

Access

Online

Find out more

TSB

TSB Business Plus Account

Here to help start-ups and switchers with 25 months free day-to-day business banking, as well as 1 year’s free expert business advice from Enterprise Nation.

Account fee

25 months free (then £5 per month)

Bank transfers

Free

Overdraft

Yes

Access

Online

Find out more

Virgin Money

M Account for Business

Here to help your business grow.

If you're a new business or just new to Virgin Money, you could qualify for our 25 months' free day-to-day banking offer when you open or switch this account.

Account fee

£0

Bank transfers

£0.18 via Business Internet Banking or £0.10 Direct or via Bureau

Overdraft

Yes

Access

Online

Find out more

Revolut

Revolut Enterprise Business Account

Open an account under your registered business name. You can change or cancel your plan at any time. Billing is monthly.

Account fee

Custom

Bank transfers

Custom

Overdraft

Access

Online

Find out more

Tide

Tide Business Bank Account

Freelancers, sole traders and limited companies, accounts dedicated to you.

Account fee

£0

Bank transfers

£0.20 per transfer

Overdraft

Access

Online

Find out more

Allied Irish Bank

Allied Irish Banks is one of the so-called Big Four commercial banks in Ireland. AIB offers a full range of personal and corporate banking services.

Allied Irish Bank (UK) offers a number of business current accounts – see below to find out which is most appropriate for your company.

Account fee

£10 per quarter

Bank transfers

£0

Overdraft

Yes

Access

Phone & Email

Find out more

Santander

Santander 123 Business Current Account

Discounted monthly fee of £5 for start-ups for 18 months and switchers for 12 months (£12.50 standard monthly fee)

Unlimited Santander ATM cash deposit

Up to £300 cashback each year

Interest on your credit balance

Access online, at Santander branch counters, ATMs and Post Office branches

Account fee

£12.50

Bank transfers

n/a

Overdraft

Yes

Access

Online

Find out more

Lloyd's

Lloyd's Start-up and small business account

The account that helps your business make a flying start, including 12 months’ free day-to-day business banking and specialist support when you want it.

Account fee

12 months free (£7 per month)

Bank transfers

Overdraft

Yes

Access

Online

Find out more

HSBC

HSBC Business Banking Account

Larger businesses with specialist banking requirements

For:

Mobile & Online banking
Apply for borrowing of up to £100k (credit is subject to status)
Dedicated relationship manager
Multi-user access

Account fee

£32 (annual fee)

Bank transfers

Overdraft

Yes

Access

Online

Find out more

Legal

Get in touch

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 will receive a commission or finder’s fee for effecting such finance and insurance introductions.

*Eligibility criteria apply - see Tide website for full details.

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