For those customers who have never arranged finance for their equipment purchases, and even for some of those who have, it can sometimes be a little confusing and we find that the questions that come up time and again are fairly similar.
We have answered many of these for you here but, if you don’t find the answer you are looking for, then contact us and we will be happy to answer all of your questions.
Most customer who finance their capital purchase have the cash to pay outright but these are just some of the reasons they chose to finance.
The repayments on a lease are an allowable business expense. So, for a business which is making money, the profit can be reduced by the amount of the rentals paid each year. Simply, the business pays less tax on its profits.
The repayments on hire purchase and leasing are determined at the commencement of the agreement and remain fixed throughout the whole period, meaning that you are protected from any increase in general market interest rates.
A finance facility from Corporate Asset Solutions enables you to keep your cash to use for other areas of your business, where cash is the only option. Items such as adverting and marketing, staff training and perhaps those unexpected expenses can only be met by cash, so don’t waste it on what will be depreciating assets.
A lease is unique and no other form of finance compares.
The repayments on a lease are treated as a rental and therefore attract VAT. The VAT can be reclaimed for VAT qualifying business.
If the business is also making profit, then it will be paying tax on that profit. The repayments on the lease for the financial year can be expensed before the pre-tax profit is declared.
Even if a business is not profitable and cannot claim any tax benefit, the flexibility that a lease offers is sufficient justification alone for many businesses to chose this financing option.
There is no doubt that banks have a role to play, in helping to finance most businesses, but you need to think carefully about a number of things.
If your business is in the fortunate position to be favoured with an overdraft remember, that this facility that is on call, which means that the bank can demand its money at any time.
If you use your overdraft to fund assets, what will happen if you near to your limit and an unforeseen need for cash arises?
Loans and overdrafts with banks do not fix interest rates indefinitely – rates can change and so can the cost of your borrowing.
Most businesses have a mix of lending with a number of providers – short term facilities with access to ready cash from their banks, long term lending on property from specialist lenders and asset and equipment finance, from providers like Corporate Asset Solutions.
In a word, no.
In the instance of a hire purchase agreement we ask that the outstanding payments are settled and, in return, we provide a small early settlement discount.
In the instance of a lease, you can sell the equipment to a third party of your choosing, as our agent, or return the equipment to us. Again, we would expect payment of the outstanding rentals, at the time of settlement.
One of the main benefits of financing with us is that there is no need to find a large, cash deposit.
You can, of course, make an initial payment, which will probably be equivalent to 1 to 3 monthly repayments and, in certain circumstances, we may ask for slightly more. However, as a general rule, our facilities allow you to finance the full balance of the equipment you are acquiring.
For larger transactions, we can consider VAT deferments, seasonal repayments, balloon payments with the final repayment and a number of other ways to help you manage your repayment schedule, to suit your business.
As little or as much as your business’s circumstances dictate.
For new and recently formed businesses, we are more likely to need to information relating to the owners of the business. Equally, for established business with accounts filed at Companies House, then an indication as to what you are buying, from where and for how much is probably all that we will need, to make you an offer of finance.
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