What are the the Equipment Leasing Options?

Although there are many different leasing finance products being marketed today they are all based on six basic types. At Eland Business Services we can help you decide which type of lease best suits your needs and structure a package tailored to your specific requirements. Here are the different varieties of scheme you can choose from:-

What are the leasing options?

1. Finance Lease

   This is a closed ended lease, that is for a set amount of time, with fixed rental period of anything from 1 to 7 years. The amount you pay over the leasing period covers the full value of the asset, plus finance charges. You assume all the benefits and risks of ownership but legal ownership does not pass to you until the end of the agreement. At that point, options to extend at minimal cost or buy the equipment out right for a nominal transfer fee can be selected. Sometimes the asset is sold and the proceeds shared between the lessee and the finance company.

2. Lease Purchase

   This method of financing equipment purchases is similar to hire purchase. Essentially, it is set up like a finance lease but it is accepted that there is a clear intention, on the part of the lessee, to purchase the asset at the end of the lease period.

3. Operating Lease

   This is an open-ended lease, that is, there is no set timescale only an agreed minimum term. You can end the agreement at any time after the minimum rental period allowing you to upgrade the equipment you have leased, where applicable. This flexibility to upgrade makes an operating lease an excellent option where technological equipment is concerned. Because operating leases are usually short term agreements the payments required do not cover the full value of the asset and it is not unusual for the lessor to lease the item to a new customer or sell it when returned.

4. Balloon Lease (Residual Value)

   In a balloon lease, the monthly payments are kept low by arranging a larger final payment at the end of the leasing term. If your company is expanding rapidly a balloon lease may be a good choice since it will allow you to access more equipment than you would be eligible for under the terms of a finance lease.

5. Sale and Lease Back

   Used equipment belonging to the lessee is "sold" to a lessor and then leased back. This is a useful way to raise cash but high minimum values can sometimes apply. For more information about this form of equipment finance, visit our Sale and Leaseback page.

6. UK Small Firm Loan Guarantees and Leasing

   If your company is new or less than five years old, this government backed scheme is aimed at helping start up companies with a viable business proposal that includes the leasing of equipment. If this describes your company please get in touch with us for more details.