Operating Lease
The key advantage of operating leasing is that the finance can be placed off-balance sheet (subject to auditor approval) thus keeping other lines of credit open to you and your gearing intact.
- Choice - at the term end, you can return the asset or extend the period. Either way, you do not carry the problem of disposal of the equipment.
- Tax efficient - rentals can be offset against profits.
- 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.
- Low start up costs - deposits as low as one payment down with the VAT spread over the term of the agreement. Fixed maintenance contracts can also be built in to the monthly rental.
An Operating Lease is simply a rental agreement. You avoid the risks associated with ownership and have no residual value liability. At the end of your operating lease agreement you may simply return the vehicle.
Operating Leases can minimise capital budget approval delays. Generally, lease payments are accounted for in an organisation's operating budget, which means it doesn't have to work through a time-consuming capital expenditure approval process.
