does it work?
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
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
How long does it take to organise
leasing or H.P.?
payment / deposit will I need to pay?
What lease payments are available?
What are the costs for leasing
and hire purchase?
Can I settle
- 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?
- 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.
- 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
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.
- 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:-
- To continue leasing, on an annual basis for an
- 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
- Can I raise some cash by re-financing
equipment I already own?
- Yes, but it depends on the age and type of
- How long does it take to organise leasing or
- 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
- What lease payments are
- 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
- 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,
contact us or use the
+44 (0)1491 642077
+44 (0)1491 642078