Home Types of Leasing

There are several types of equipment finance leases. The type of lease programs offered depend on what kind of equipment leased, what you want to get out of this lease and what your long-term goals.


Financing Leasing


Financing leases are another kind of lease. With these types of leases there is an assumption of a buyout. Basically, customers pay the purchase price plus interest over the term of the loan agreement. At the end of the term a small percentage of the price is paid to acquire ownership of the equipment.


Operating Leases


An operating lease is one of the most common types of leases. With this lease, the lessee owns the equipment and there is no predetermined buyout. The lessee calculates this payment simply as an operating expense. One main advantage of this lease is that it usually has lower payments. It is perfect for equipment that quickly depreciates, such as computers.


Hire Purchase



Sales Lease Back


This allows capital in the form of a percentage of the asset value, to be raised quickly against plant and machinery assets. Once the advance is repaid in full, the assets are returned to the company. The biggest advantage of sale and lease back is the ability to capitalise on a company’s assets to gain fast access to capital for various purposes. This allows the customer to reinvest the money back into their business while still using the equipment it needs.


Examples could include simply enhancing cash flow or even the purchase of new machinery to promote business growth. On occasions, the fund providers may look for additional security, over and above the fixed asset, this may be either by personal guarantees or by other means.


In an environment where raising finance is more difficult and residual values are falling, firms operating vehicles or assets would do well to consider looking at sales and lease back options. This offers protection against falling values and can release capital tied up in vehicles or other capital assets.


The customer can take the sale proceeds for their own use, while the risks associated with residual values are passed to the leasing company. That means when the vehicle or company assets comes to the end of their natural life, it can be replaced and slotted into a traditional assets replacement cycle.  





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