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Operating Lease

Operating Lease, Business finance, Manchester, Birmingham, London

Are you looking to acquire equipment immediately?

Operating Lease and Rental facilities are the only means of acquiring equipment, which do not get capitalised on a balance sheet. One obvious advantage of an Operating Lease is that, because the debt is not evident on the balance sheet, the company's gearing is not affected. Ownership remains with the finance company, whilst the hirer enjoys usage of the equipment for a lower rental, for a fixed period. All rentals (including pre-payments) are charged against the Profit and Loss account. VAT is paid on each rental throughout the term.

An Operating Lease is a highly cost effective way of obtaining immediate use of vehicles, machinery or other equipment for the period of time you need to use the equipment.

How does it work?

The facility is very similar to contract hire for a car where the finance company take the residual value risk of the equipment at the end of the lease. In a nut shell a portion of the capital investment is put to the back of the agreement for which the finance company takes all the risk.

This enables the user of the equipment to hire the said equipment for the cheapest possible monthly price.

At the end of the agreement the business user simply returns the equipment to the finance company refinances the outstanding balance for a further period or purchases the equipment from the finance company.

The advantages of handing the equipment back is that the user can hire the latest technology which is often faster, more efficient providing increased revenue and ultimately profitability.

See also


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