finance lease
Many businesses prefer to finance lease ‘soft’ assets like I.T. as it only has a short useful working life. An accountant may also recommend that this product is more suitable for a business to help reduce tax.
finance lease
What is a finance lease?..
A finance lease is simply renting the asset over an agreed period of time and you usually remain responsible for the maintenance.
One of the key features of finance leasing is that the customer takes on most of the risks and rewards of ownership but never actually own the asset. In practice, this means that a finance lease looks and acts a lot like hire purchase but they’re different on the balance sheet.
Operating leases are available for all asset categories including vehicles, office equipment and industry-specific machinery.
If you are interested in an operating lease or contract hire/personal contract purchase facility, we can help.
Call 0115 958 6872, email enquiries@maffinancegroup.co.uk or fill in an enquiry form for further information.
some of the sectors that we work in...
finance lease explained...
A finance lease is simply renting an asset over an agreed period of time.
You usually remain responsible for the maintenance of that asset, but one of the key features of finance leasing is that you will take on most of the risks and rewards of ownership, while never actually owning the asset.
A finance lease facility is good for businesses who want to use equipment that has a short usage life, such as IT equipment, or for those who are in need of expensive equipment without wanting to pay the full amount upfront.
It’s an alternative to purchasing equipment outright that also offers potential cashflow benefits as you can make payments from income generated by the equipment.
- Minimal cost upfront
- Fixed regular payments
- 50% of VAT can be reclaimed
- 100% of VAT for maintenance can be reclaimed
- Choice to retain use of the asset at the end of the facility term
- Additional line of finance that may not affect core banking arrangements
The assets are purchased from the supplier by the funder and remain the property of the funder. You will then be able to use and retain possession of the asset, paying its full cost amount in fixed rental payments over the term.
At the end of the term, you can simply hand the asset back to the finance company.
However, you may be offered a secondary period lease for a nominal amount, known as a ‘peppercorn’ rental – essentially starting the lease again.
A third option is selling it to a third party that isn’t related to your business, at a fair market value.
If you sell it for more than the final payment of the asset, you will be able to keep a pre-agreed percentage of the net sale profit. However, if it’s worth less, you will be invoiced for the difference.
things to consider...
vat
Your deposit will be lower as the VAT is spread over the term of the agreement rather than an upfront cost
contract hire
Have a look at our specialist vehicle platform for other vehicle leasing options for your business
maintenance
Depending on the type of leasing product you choose, you may be responsible for maintenance of the asset
end-of-lease
Depending on the lease, you can either return the asset, sell it to a third party, sell it on behalf of the funder or keep the asset and pay continuing rentals.
so how does finance lease work?
Card #2
Card #3
Card #4
get in touch...
0115 958 6872 and a member of our team will be happy to speak to you.