* All finance is subject to credit status checks and a guarantee may be required. ** Your accountant can provide you with more information on the tax benefits.
FAQ's on Finance Leasing through Sephra
Why lease? Leasing is probably the most popular method of financing new equipment today. Virtually any item of equipment can be leased.
How does a lease work? A lease agreement is a contract between you, ‘the customer’, and a leasing company. This enables you to have and use a piece of equipment over a period of time on payment of rentals to the leasing company. With a typical lease agreement, you make a series of regular payments (usually on a monthly basis), thus helping cash flow, as opposed to a large capital outlay for the equipment. You won’t have a depreciating asset on your books, and can benefit from the tax advantages of paying a lease rental.
Do I need a large deposit? A nominal amount (normally the equivalent of 1 monthly payment) is generally all that is needed in advance of a lease agreement. This small cash outlay means you can have the latest technology and start to enjoy the extra profits this generates before your next lease payment is due. The full invoice amount is settled with the supplier upon the equipment being installed or delivered to your satisfaction.
Should I pay cash or lease? You may be able to afford to buy the equipment outright, but before you make this decision you must consider the following:
All leasing payments are rental payments and as such are an allowable business expense, therefore if a business is making money the profit can be reduced by the amount of the rentals you pay each year, which in turn reduces your tax bill.
Payments are normally the same throughout the lease contract. This means that increases in interest rates do not affect you and your cash budget can be utilised more effectively.
Leasing enables you to protect your cash to use for other needs such as new stock, staff training, advertising, new business opportunities and unexpected expenses.
Do my payments increase if inflation or interest rates rise? No. Your monthly payment is fixed at the start of the lease and so are unaffected by interest rate rises. This enables you to budget your cash flow more accurately. As inflation rises, because your payments are fixed the cost of the equipment reduces in real terms.
How do I make my payments? All payments are mainly made by Direct Debit on the same date each month.
Should I go to my bank? If you use all your cash, or any overdraft facilities, you leave yourself in a vulnerable position to react to any unexpected needs of short-term borrowing. By leasing you don’t need to find the whole invoice amount “up front”.
Who leases? Nearly every market sector large or small benefits from leasing, from new start business to large established companies.
Is leasing tax efficient? Yes. Payments can be offset against your tax liabilities. Your accountant will be able to give you more information on this.
Have the best equipment You normally only pay one Monthly payment in advance with a lease agreement*; this enables you to choose the best equipment available with only a small initial cash outlay. You can therefore have the best equipment available with the latest technology with only a small initial outlay, and start to enjoy the extra profits this generates before your next lease payment is due.
*Subject to terms and number of years trading
Kennet Equipment Leasing
Kennet Equipment Leasing has been providing UK businesses with equipment finance since 1991. With access to many of the top lenders, as well as our own significant resources, we successfully place finance agreements for a huge range of businesses, of all types and sizes.
Having financed equipment to a value in excess of £500M you can rest assured that Kennet Equipment Leasing are the people to talk to for any business equipment requirement. From £250 upwards, we will have a solution that suits your cash flow and budget.
Whether you are looking to buy equipment for your own business, or seeking an affordable finance solution for your customers, Kennet Equipment Leasing will give any business the power to grow.
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