Popular Reasons Uk Businesses Choose To Finance Their New Equipment

Written by admin on December 7th, 2010

You can finance most types of business asset – Choosing a reputable funder means they can offer you a fully managed solution for many different business assets, from IT, software and hardware, to garage equipment, catering equipment and heavy plant machinery
VAT savings – your business can normally claim the rental VAT for non-vehicle assets and vehicles used solely on company business. You can also normally claim half the rental VAT for vehicles used for private purposes

Low monthly payments to suit your budget – The funder owns the asset and leases it to you for an affordable monthly cost to suit your budget, keeping your costs down and making it easier to budget

From one asset to many – A good funder can work with every kind of business, from sole traders to large corporate clients – whether it’s one phone or a complete telecoms network

One comprehensive monthly payment – maintenance and additional warranty contracts can be included within the lease agreement.

More Flexibility – as the customer, once you have reached the end of your finance agreement you may sell, enter into a secondary rental period or write off the asset.

No disposal costs – as the funder owns the title to the asset, they will typically dispose of it at the end or the agreement on behalf of the customer, saving you time and resources.

Different Types of Asset Finance Explained:

Finance Lease/Lease Rental
The title of the asset being leased is retained by the lessor and the leasing payments are calculated based on the total invoice value of the asset. Lease rental is the most common form of leasing when it comes to financing equipment for businesses. There may be an option to extend the rental period at the end of the term into a secondary period, whereby the lessee continues to rent the equipment from the lessor. In some circumstances title of the equipment may also be sold to the lessee for a nominal sum via a third party.

Contract/Hire Purchase/Lease Purchase
Contract purchase is the commercial equivalent of hire purchase. The asset is owned by the “hiring” company until the final payment is made at the end of the term at which point title passes to them.

Operating Lease
The asset title belongs to the lessor who rents the asset to the lessee over an agreed period of time, which is typically between 2-5 years. The lessor will look at the residual value of the asset and take this into consideration when calculating the lease payments to the lessee. As the lessor will typically look to sell or rent the asset again after the lease runs its full course because the lessor knows it still has a residual value attached to it, they can therefore reduce the lease payments to the lessee, safe in the knowledge that the lessor can realise additional profits once the lease finishes. Operating leases are often used by government bodies, councils, etc for larger core equipment and assets. Often the lessee will look to continue the rental of the asset after the initial fixed term reaches an end.

Contract Hire
Can be viewed as another form of operating lease (commonly found in use with vehicles) which includes many service and warranty features like maintenance, replacement during repair, complete vehicle management, tyres, etc. As with an operating lease, the lessor owns title to the asset for the whole duration and the rental calculation is based on a residual value of the asset over an agreed period of time, taking into consideration natural depreciation of the asset. Use the below form and we’ll give you a quote based on what best suits your business requirements.

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