This is a rental agreement which can be used to finance a broad spread of business assets but is particularly effective for financing heavy commercial vehicles. The Funder builds in a residual value to reduce the rentals, thus helping cash flow and making 'off-balance sheet' funding possible.
Key features and benefits:
- Preserves cashflow – offers the obvious cashflow benefits of paying in instalments.
- Initial deposits can be as low as one monthly rental down with the VAT spread over the term of the agreement.
- Competitively priced - the Funder or manufacturer takes the risk in the residual value of the equipment and factors this into the rental, bringing down the periodic cost to you.
- Fixed maintenance contracts can also be built in to the monthly rental
- Tax efficient - the rentals can normally be offset against taxable profits
- Asset normally treated as 'off-balance sheet' (subject to your auditors' approval).
- Flexible - at the end of the term, you can return the asset or extend the period. Either way, you do not carry the problem of disposal of the equipment.