End-User Guide
A user's guide to financing equipment purchases

How does it work?
What are the differences between leasing and hire purchase?
Do I have to be a limited company to qualify for leasing?
What information do we have to supply to the leasing company?
Can I include other equipment from several different suppliers in one lease?
If I don't want my supplier(s) to know that I am going to lease the equipment, can you help?
Can I lease second-hand equipment?
Can I raise some cash by re-financing equipment I already own?
How long does it take to organise leasing or H.P.?
What down payment / deposit will I need to pay?
What lease payments are available?
What are the costs for leasing and hire purchase?
Can I settle early?

How does it work?

The lessor buys the equipment from your supplier and then leases it to you (the lessee).

When you sign the corresponding lease or hire purchase agreement, the supplier invoices the lessor, who, having paid them for the equipment, starts to charge you the monthly or quarterly payments over 12, 24, 36, etc. months, via direct debit.

What are the differences between leasing and hire purchase?

1. VAT - With hire purchase (often referred to as lease purchase) you pay all of the VAT with your first instalment. Leasing spreads the cost of the VAT which is applied to each monthly or quarterly instalments. In both cases you recover the VAT but with hire purchase the initial VAT can be a sizeable amount of cash for you to find for a few months.
   
   
2. TAX - Both finance methods provide you with savings to offset against your year-end taxable profits. With HP, you can claim 25% of the equipment cash price in the first year, then 25% of the balance in the second year and this continues on a reducing balance basis each year. With leasing, all the lease payments you make in the financial year can be offset against your taxable profits for that year.
   
   Leasing can therefore be more tax efficient in the short term, if you buy something early in your financial year. On the other hand, if you make a sizeable purchase near your year-end, then hire purchase might be more tax efficient for you.
   
   
3. OWNERSHIP - At the end of the hire purchase agreement, title to the goods passes to you for a small transfer fee, usually £50 - £100.
   At the end of a lease you generally have two options:-
   1. To continue leasing, on an annual basis for an annual.
   2. You can gain title to the equipment via a third party.
      
      

Do I have to be a limited company to qualify for leasing?

No, we can finance any business or organisation.

What information do we have to supply to the leasing company?

The leasing company (lessor) needs to be convinced that you are likely to pay your instalments every month, on time, for the term of the lease, say 3 years. If you have been established for several years, then a copy of the most recent year-end accounts is enough.

If you are a start up, or relatively new business and therefore don't have a business track record, then we need to profile you in much more detail - business plans (which we can help you to prepare under a separater arrangement), CVs, home addresses of directors, references, etc.

Can I include other equipment from several different suppliers in one lease?

Yes, no problem.

If I don't want my supplier(s) to know that I am going to lease the equipment, can you help?

Yes, we provide you with finance that is invisible to your supplier and we pay you for the goods at the same time as you pay your supplier.

Can I lease second-hand equipment?

Yes.

Can I raise some cash by re-financing equipment I already own?

Yes, but it depends on the age and type of product.

How long does it take to organise leasing or H.P.?

Anything from one day to two weeks, depending on the strength of your business and how up-to-date your financial records are.

What down-payment / deposit will I need to pay?

It depends on your preference and the lessor's opinion of your financial status. We can often provide no deposit - nothing to pay for up to three months - finance, but either one month or three month's instalments is the usual minimum. You can pay up to 50% in cash and finance the balance, if you wish.

What lease payments are available?

Standard payment terms are monthly or quarterly. Over 3 years for example, it could consist of 11 more quarterly payments (one quarter due on signing the lease following at 3 monthly intervals by 11 more quarterly payments; or a 3 + 33 profile, the initial payment being 3 months lease rentals followed at monthly intervals by 33 more payments. We can usually tailor the payment schedule to meet your cash, budget or tax priorities, for example:-

• An 18 month lease to match the income from an 18 month contract you have won;
• payment "holidays" for the one or two months in a year when business is slack;
• install now - pay later so you can generate income from the equipment before you start to pay for it.
  
  

The minimum finance period is twelve months, commonly two or three years for 'hi-tech' products, five years for longer life equipment.

What are the costs for leasing and hire purchase?

The interest rates depend on several factors such as the purchase price of the goods [below £10,000 the rates are higher than for purchases over, say £50.000] and your credit status. The monthly or quarterly costs also depend on whether or not you pay a deposit and whether you finance the balance over, for example, 21, 23 or 24 months in the case of a two year lease.

Can I settle early?

Yes, but it is generally not an efficient use of your cash because you will be paying off future interest charges.

Click here for a few examples of recent funding

For further information,
please contact us or use the enquiry form

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