When financing a capital programme there are a number of options, the two main options being cash purchase or lease rental. Even for cash rich companies, leasing provides a wide range of business benefits.
The cheapest option is very rarely the best option in the medium to long term. By taking the leased route, you and your business are able to get the best solution for your needs now, allowing you to compete effectively in the marketplace.
It’s often a misconception that lease rental is an expensive funding tool, once you calculate the net present value of the payments and relevant tax relief, lease rental shows its true strengths and will present your company with a number of benefits.
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No large outlay
The biggest advantage of leasing is that the capital cost is spread over a number of years with no need to pay the entire amount upfront.
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Easy Budgeting
The inflation proof quarterly or monthly rentals remain fixed for the full period of the agreement, significantly helping maintain cash flow and simplifying budgeting. In reality it means that the real cost of your lease is in fact dramatically lower than the payments you make.
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Tax Deductible
Because lease rentals are 100% tax deductible against profits, the total cost (capital and interest) can be offset during the lease period, with your payments deducted as a trading expense.
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Simple Upgrades
Your equipment can be easily upgraded by simply restructuring the schedule of your lease agreement.
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Access to Latest Equipment
Leasing can also allow you to use the latest, faster, more efficient and accurate equipment that would be too expensive to buy outright.
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Immediate Use
Your equipment can be installed and operational immediately instead of waiting for the budget to become available.
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No impact on existing bank facilities
Any bank facilities, such as overdrafts remain unaffected as there is no initial capital expenditure.
