Operating Lease
An operating lease is a lease which provides an asset to the customer for an agreed period in return for repayments which in most cases are significantly lower than other finance methods. The lower repayments are achieved by the finance company taking an asset risk (residual value) at the end of the agreed period.
At the end of the agreed period, our customer usually has three options:
- The equipment can be returned to the finance company without any further obligation.
- The customer can extend the lease for a further specified period of time and usually benefit from a reduced payment.
- The customer can purchase the equipment at an agreed price.
Features
- Use of latest technology without ownership.
- Equipment does not show on the balance sheet.
- No residual value risk for customer.
- Repayments are subject to VAT.
- End of term flexibility - extend, return or purchase.
Benefits
- Low repayments enabling our customer to enhance their cashflow, reinvest savings and more efficient budgeting.
- Ability to match repayments to anticipated equipment usage or length of a particular contract.
- Rental is deductible against income tax.
- Enhance financial ratios on the customer's balance sheet (subject to auditor's approval).
- No risk of depreciation or disposal concern.