Asset Finance is a versatile product that enables businesses to acquire equipment or vehicles now, and pay for them from the profits that they will generate. Would you pay your staff wages twelve months in advance? We think not!
A lease facility is probably one of the best and most efficient ways to finance equipment for your business.
By leasing equipment, you do not tie up the most valuable commodity your business has; working capital. Equipment is paid for over the term of the lease, typically between two and five years, so you have the benefit of the equipment now and pay for it over its useful life whilst it generates more profits for you.
The rentals you pay are all 100% tax allowable giving you a further 'hidden benefit'.
By using leasing you also protect your bank facilities and build up alternative sources of credit, facilitating growth for your business.
Leases are normally only secured upon the equipment that we finance, so there is usually no need for additional security.
A Finance Lease offers similar benefits and risks to a HP agreement. However 'title' (ownership) to the equipment remains with the finance company at all times. As the customer does not have outright ownership, no capital allowances are available. However, equipment is capitalised in the Balance Sheet, and depreciation is charged to the P & L account. VAT is paid on each rental throughout the term.
At the end of the Lease, the customer enters into the “secondary period“ whereby one month's rental is paid on an annual basis (Peppercorn rent). Alternatively the customer sells the equipment and retains a high percentage of the sale proceeds and accounts for the balance to the finance company.
Also known as deferred purchase, lease purchase, purchase plan, or simply, HP. A popular and traditional finance method where payments of capital and interest are paid over the agreement term. Capital allowances are claimed on the full cost of purchase, commencing in the accounting period when equipment is acquired. VAT on the full equipment price is payable (and reclaimed) at the outset, often together with a deposit.