Operating Lease

An Operating Lease lets your business benefit from fixed costs based on a predicted annual use. The equipment remains the property of the Finance Company and you return the asset at the end of the agreed term.

• With an Operating Lease, rental and return conditions are fixed at the outset
• Potential for improved cash-flow through payments that are normally lower than Hire Purchase or Finance Lease as on an Operating Lease the rental cost is based on the difference between an assets original purchase price and its residual value at the end of the agreement
• VAT is payable on the rentals and these can be reclaimed (different rules for cars), so it is not necessary to pay VAT on the equipment cost up front
• Off balance Sheet funding so it doesn’t show on your liabilities

Benefits of an Operating Lease

• Low initial outlay - Quick access to the asset you need without a heavy upfront investment
• Freedom - Full use of the asset without having to buy it outright
• Flexibility - Option to re-rent, purchase or return the asset at the end of the term
• Pay less - Rental cost is reduced as it is based on a percentage of the original capital cost
• Off balance sheet funding
• Reduce costs - Reclaim VAT on rentals