Is there collateral in a Financial Lease construction?

Is there collateral with Financial Lease?

With Financial Lease, the vehicle you are financing is usually considered the collateral for the financing. This means that the vehicle itself serves as collateral for the loan. This allows you to benefit from attractive financing terms without having to use other valuable business assets as collateral. This makes Financial Lease a practical and accessible financing option for entrepreneurs.

The leased vehicle in a Financial Lease agreement acts as collateral. The bank has legal ownership during the term of the contract, meaning they can reclaim the vehicle in case of default. This provides security for the bank and allows them to sell the lease object to pay outstanding instalments if necessary. It is important to note that during the term of the contract, the vehicle should not be sold without the permission of the leasing company, as it serves as security to reduce the financing risk.