Finance

Providing the correct funding package is very important especially in today’s business environment.The following is an explanation of some of the packages we can offer.

Our Main Products

Hire Purchase

(also referred to as Lease Purchase)

The customer chooses the asset from a reputable supplier who will generally sell it directly to the lender. The customer will agree a schedule of payments with the lender and once these have all been made, legal title to the asset passes to the customer. For tax purposes, a business customer is treated as being owner of the asset from the start of the agreement. This means the customer is able to claim capital allowances and can offset interest charges against taxable profits.

Conditions/Benefits: With this method the customer hires the asset for a period of time and obtains ownership at the end of the finance agreement. During the effective period of the financial agreement,   all the operational risks and costs, such as servicing and insurance, are the responsibility of the customer.
If the asset is acquired by a business for business use, the customer will enjoy the benefit of any available Writing Down Allowances (WDA) in respect of the asset, as well as tax relief on the interest content of the monthly instalments.

Finance Lease

Under a Finance lease, the customer (“the lessee”) can never take legal ownership of the leased asset but does take the economic benefits of ownership. The rentals payable under Finance lease enable the funder (“the lessor”) to recover the full cost paid by them for the asset (together with any charges) over the initial term of the lease. The lessee will be able to offset the rentals paid against taxable profits. Because the “risks and rewards” are geared towards the lessee, Finance leases appear “on balance sheet”. Businesses often opt for this facility since lease rentals are a tax allowable expense.

Conditions/benefits: The lessee can continue renting the asset at the end of the agreement or choose to sell the asset, the lessee is entitled to keep the bulk of the sale proceeds when the asset is sold or pay an annual rental in secondary period. The lessee does not benefit from WDA’s with a Finance lease, the lease rentals payable will in most cases qualify for 100% tax relief.

During the lease period, all operational risks and costs, such as servicing and insurance attribute to the asset(s) are the responsibility of the lessee.

Use of a leasing facility enables the lessee to avoid paying all the VAT in advance by the way of initial deposit, such as would be the case with a Hire purchase type of facility.

Operating Lease

Under an Operating lease, the asset must be returned to the lessor at the end of the lease period. The lessor will depend on selling the asset to make their expected financial return. Operating leases do not (subject to approval by the lessee’s auditors ) appear on the lessee’s balance sheet as either an asset or a liability. The assets are given back to the lessor at the end of the agreement or after an agreed extension.

Conditions/Benefits: With this method the user (lessee) enjoys the benefits of the asset but not the ultimate ownership. Monthly/quarterly repayments are lower than finance lease or hire purchase repayments due to the fact that the lessor has assumed a residual value.

All operational costs, such as servicing and insurance, attributable to the asset(s) are the responsibility of the lessee during the period of the lease.
An Operating lease will always incorporate a residual value, which is attributable to the lesssor. This will not be revealed on the lease document, and will be solely attributable to the lessor who accepts all the financial risk. Because of this, the facility is treated as off balance sheet, and the lessee does not need to capitalize the asset(s) in their accounts, thereby giving potential advantages in terms of balance sheet structure and financial ratios.

The lessee does not benefit from WDA’s, but the lease rentals payable will in most cases qualify for 100% tax relief. All lease rentals are subject to VAT, reclaimable in part or in total by the VAT registered lessee, and rentals are usually calculated on a fixed interest rate basis.

Contact Hire

Contract Hire gives the user (lessee) complete peace of mind and is a hassle free solution to cover all aspects of an asset’s utilisation.
As with Operating Lease, with Contract Hire the asset must be returned to the lessor at the end of the agreement The lessor assumes the full financial and market risk of the asset value at its return in the agreed condition.

Contact Hire is an Operating Lease were a large variety of maintenance, servicing, compliance and reporting on the asset and its utilisation can be included in the rental payments, which are normally fixed for the duration of the hire. We provide both Minimum Term and Fixed Term Contact Hire as well as Fleet management for specialist commercial  vehicles and equipment. For the latter we are able to provide expert advice on the sourcing of equipment, utilisation and compliance as well as Proactive booking of Services, Repairs and 24/7 breakdown cover, which is more than simple Repair & Maintenance.

Conditions/Benefits: With Contract hire the user enjoys the benefits of the asset but not the ultimate ownership. Lower monthly/quarterly/annual repayments due to the lessor assuming a residual value. Insurance is the lessee’s responsibility. All rentals are subject to VAT (reclaimable in part or total by the VAT registered lessee) and are usually calculated on a fixed interest rate basis.

Loans

Loans are available to fund assets in some circumstance. The customer receives the loan and the title of the asset they use the loan to purchase. There is no security in the asset itself for the lender.


Click To Enlarge