Cost effective options for leasing equipment

A Finance Lease is a financial contract between the business customer (user) and the equipment supplier (normally owner) for using a particular asset or equipment over a period of time against the periodic payments called “Lease rentals”.

A Lease generally involves two parties i.e. the lessor (owner) and the lessee (user). Under this arrangement, the lessor transfers the right to use to the lessee in return of the lease rentals agreed upon.  A Lease agreement can be made flexible enough to meet the financial requirements of both of the parties.

There are various considerations when deciding whether Hire Purchase or Lease Finance is most suitable for your business requirements.

• Ownership – Ownership lies with the lessor. The lessee has the right to use the equipment and does not have an option to purchase at the end of the agreement.
• Depreciation: The depreciation is claimed as an expense in the books of the Owner so the business leasing the equipment does not record depreciation of the asset.
• Rental Payments: The lease rentals cover the cost of using an asset, normally, it is derived with the cost of an asset over the asset life.
• Duration: Generally lease agreements are for a longer duration and for large assets such as land, property etc.
• Tax Impact: The total lease rentals are shown as expenditure by the lessee.
• Repairs and Maintenance: Repairs and maintenance of the asset in a financial lease is the responsibility of the lessee.
• Extent of Finance: Lease financing can be called the complete financing option in which no deposit payments are required

Finance Leasing offers different benefits and we can advise you on the most appropriate method for your business.

For advice and guidance on finance lease options, why not contact us today for a no obligation chat with our specialist advisers.