Benefits of Leasing

Can you afford to pay your chefs salary all at once?

Can you afford to let the competition take your business just because you can not afford new equipment you need today?

Like most of us if the answer is no, leasing can help you purchase the equipment now and you can pay for it over a period of time that suits your business. Not only can it be more convinient but it is also tax deductable.

Leasing is particularly important for startups and growing businesses, where the finances are stretched.

There are three basic forms of leasing: hire purchase, finance lease and contract hire. As a basic outline the main differences between them are as follows:-

1-Hire Purchase Deferred capital payment spilt into monthly payment ending with ownership

2-Finance Lease Equipment paid for over a number of years ending with ownership

3-Contract Hire Equipment never owned has to be returned

All of the above will have different interest rates, payment terms and time periods depending upon the company used and what you have requested.

The term of the lease can match the lifetime of the asset. Therefore a loan for a cooker can be structured to match its useful life - likely to be much shorter than the life of the item.

Rather than trying to find the money in one lump sum, you casn pay for the equipment over the whole period that you use it.

Leasing gives you flexibility in a nut shell, unlike a bank loan there is no chance of being forced to repay early, flexible terms, repayment periods, interest rate is normally fixed for period of lease so you know how much money for are going to have to pay over a set period of time.

We use Shire Leasing to provide a Finance Lease

An Example of Cash Purchase vs Finance Agreement

Cash Purchase

Equipment Price £6500

Interest lost from withdrawing money out of bank deposit account at 5%

Yr 1 £325, Yr 2 £341.25, Yr £358.31 Total interest Lost £1024.56

Writing down allowence:

yr 1 at 25% = £1625 x rate of tax at 40% = £650

yr 2 at 25% = £4875 x rate of tax at 40% = £487.50

yr 3 at 25% = £3656.25 x rate of tax at 40% = £356.63

Total Tax allowence £1494.13

Total Cost £6500

Minus tax allowences £1494.13

Plus lost interest £1024.56

Total cost of paying cash £6030.43

3 Year Finance Lease

Equipment Price £6500

Financed over 3 years -(10% deposit ten 36 x £201.35)

Interest gained from money in bank deposit account at 5%

Yr 1 £325, Yr 2 £341.25, Yr £358.31

Total interest Lost £1024.56

Finance Agreement = 100% tax deductable (total repayments = £7898.60)

Minus tax allowence at 40% of £7898.60 = £3159.44

Total Tax allowence £3159.44

Total Repayments £7898.60

Minus tax allowences £3159.44

Minus interest gained on capital £1024.56

Total cost paid on finance agreement £3714.60

Clearly the difference is in favour of a 3 yr finance Lease.

How do I get a Finance Agreement?

If you would like us to organise a finance agreement for you with shire leasing please e mail us with the following information.

1-Item and cost

2-Your address and contact tel numbers

We will speak to Shire leasing on your behalf, they will ring you and speak to you directly, they will want to know how much you can reasonably pay per month, how long a term you would like etc. They will then send you an accepatance form to sign and return, after which the goods can be dispatched to you.

For example, Mrs Austin owns a cafe in Lancashire and wants to purchase a dishwasher that can wash the dishes in 2 mins, saving on costs of anxcillary staff and keep ahead of her competition. The Dishwasher costs £1600, a 3 month deposit of £120 then 33 months payments of £38.09, this means that for £1.26 per day Mrs Austin can wash her dishes much more efficiently.