Keep funds available for your business
You might want to buy extra stock for a busy period. Perhaps you need tools for a new project. Or you want a reserve to cover the weeks between sending an invoice and receiving your customer’s payment.
In these situations, putting less of your own money into a vehicle can be helpful. It does create a monthly commitment. The example below shows how a smaller down payment affects the monthly payment and total interest when the other assumptions stay the same.
The right choice fits both your working day and your budget. Consider how much cash you want to retain upfront and what you can comfortably pay each month.
What might you need to pay upfront?
Ask for an overview of everything you need to pay before or at delivery. Review the down payment, VAT and any contract or delivery charges separately. Your proposal should specify which items apply.
A vehicle with VAT shown separately
Where financial lease is treated as a supply of goods for VAT purposes, VAT is charged at the outset. Discuss whether you need to pay it yourself or whether temporary VAT finance is available. Some lenders offer this, subject to separate terms and potentially additional interest. [3][4]
You can reclaim VAT only to the extent that you are entitled to do so. Use for VAT-taxable business activities and any private use affect the treatment. [5]
A margin scheme vehicle
When a vehicle is sold under the Dutch VAT margin scheme, no separate VAT amount appears on the purchase invoice. You cannot reclaim purchase VAT, and there is no separate purchase VAT amount to advance on top of the margin scheme price. Any required down payment is a separate matter. [6][13]
Confirm exactly how much you need to contribute before delivery. You can then plan your cash reserve around the actual proposal.
With or without a down payment: an example
Suppose you want to finance a margin scheme car costing €25,000. The two fictional calculations below relate to the same vehicle. Only the down payment changes.
Item | No down payment | With a down payment |
|---|
Margin scheme vehicle price | €25,000 | €25,000 |
Down payment | €0 | €5,000 |
Amount financed | €25,000 | €20,000 |
Contract term | 60 months | 60 months |
Illustrative nominal annual interest rate | 8.00% | 8.00% |
Final balloon payment | €5,000 | €5,000 |
Monthly payment, rounded | €438.86 | €337.48 |
Total interest, approximately | €6,332 | €5,249 |
Total including down payment, monthly instalments and balloon payment, approximately | €31,332 | €30,249 |
With no down payment, you retain an additional €5,000 at the start of this example. Your monthly payment is approximately €101 higher, and you pay around €1,083 more interest over the full term.
This is our own illustrative calculation, not an offer or a current Lease Point interest rate. It assumes 60 equal monthly payments in arrears, a monthly interest rate of 8% divided by 12, and the balloon payment falling due with the final monthly payment. Figures are rounded. Any contract charges and all running costs are excluded. Your actual rate, monthly payment and terms will be set out in your personalised proposal.
What is a final balloon payment?
A final balloon payment, known in Dutch as a slottermijn, is the part of the finance that remains outstanding at the end. You defer repayment of this portion while paying interest on it during the contract. This can reduce the monthly instalment, but leaves a final amount to settle. [12]
Plan how you would meet that payment. An expected sale price is not a guaranteed return. You should also avoid relying on replacement finance that has not been approved.
Choosing no down payment and choosing no balloon payment are separate decisions. Match your proposal to what you can pay at the start, each month and at the end.
Is it available to self-employed people and new businesses?
A young business may also qualify for financial lease. [9] Whether you can lease without a down payment depends on an assessment of your circumstances. Among other things, the lender considers your ability to meet the payments and the vehicle being financed. [7]
Just starting out? Tell us why you need the vehicle, what work you do and what you can afford. Lease Point will explain which information the lender needs and whether the proposal requires an initial contribution.
Choose the vehicle around your daily work. A spacious van may suit tools and materials, while a car may be a better fit for client visits. You can also consider used vehicles: leasing is available for used business assets as well as new ones. [11]
Consider your total vehicle budget
The monthly financial lease payment covers the finance. You generally arrange and pay for insurance, maintenance and repairs yourself. [8] Also allow for fuel or charging, vehicle tax where applicable, tyres and parking.
Before choosing, ask yourself three questions:
How much cash do I want to retain upfront? Decide on the reserve your business needs after delivery.
What can I pay each month? Include other vehicle costs and quieter trading periods.
Which commitments remain? Check the balloon payment and the terms for early repayment or ending the agreement.
Lease payments remain a commitment for the agreed period. Include their financial impact in your business budget. [11]
What about tax?
With financial lease, repayments of principal are not deductible expenses. Business interest, depreciation and certain running costs may reduce taxable profit. Private use may also affect Dutch taxable income through bijtelling, the private-use addition, and require a VAT adjustment. Ask your accountant to apply the rules to your circumstances. [10]
