Business Finance > Lease Finance
Business Ideas - Lease Finance
Lease Finance or Capital Equipment Leasing is a good way to obtain the cost of large, expensive items that are essential to your business and spread out the cost. Leasing is used extensively for the following:
- Production Machinery
- Cars and Commercial Vehicles
- Computers and Computer Equipment
- Audio Visual Equipment
What is Lease Finance?
A lease broker will take your list of equipment or vehicles and arrive at a residual value following the lease term. In other words, what is your three year old envelope making machine likely to be worth when the lease ends? You are effectively borrowing the difference in cost between the new item and what it is likely to be worth at the end of the period. The good thing about leasing, is that it is a fixed cost, and often more tax efficient and cheaper than borrowing money for the full amount. Remember though that you do not own the items you lease, although you may have the option to buy or even extend the lease at the end of the contract.
Case Study:
A gift manufacturer needed to up production for a newly introduced item. The upgraded equipment required was more than the cash she had available but she was sure that the income from making and selling more would make the upgrade worthwhile.
- Jaquinta says:
"If there was one piece of advice I'd offer to anyone considering leasing capital equipment, it would be to get several quotes form different brokers and do not assume that the manufacturer has the best deal for you. The difference in the quotes I got was amazing, and the way brokers can twiddle and tweak the figures the make sure the package is right is incredible."