Financing Equipment Purchases

A User's Guide to Financing Equipment Purchases

We can provide you, subject to status, with leasing and purchase schemes over any period between six months and five years, with payments tailored to your cash flow or budget. This guideline answers most of the questions asked about leasing and hire purchase but we'll be happy to discuss any queries you have.

Q. How does it work?

The funder buys the equipment from your supplier and then leases it to you (the lessee). You make monthly payments to the lessor via direct debit. At the end of the agreement, you can own the equipment.

Q. What are the costs for leasing and hire purchase?

The cost depends on the purchase price (below £10,000 the interest rates are higher than for purchases over, say, £50,000), your credit status and whether or not a deposit is paid.

Q. Do I have to be a limited company to qualify for leasing?

No, we can finance aany business structure.

Q. Can equipment from several suppliers be included in the one lease?

Yes, no problem.

Q. Can I raise cash from equipment I already own and want to keep?

Yes! The lessor will pay you market value for equipment which you then buy back over one, two or three years.

Q. Do I have to pay a deposit?

No, you can use the kit for up to three months after delivery before you commence the lease payments - good for cash flow!

Q. I need some new kit now, but still have HP outstanding on existing kit. Can you help?

Yes, we can usually refinance your old kit to at least pay off your outstanding HP, simply by increasing the monthly cost of the new kit you lease from us.

Q. What information do we have to supply to the leasing company?

If you are an established company and don't have excessive debt then a copy of your most recent year-end accounts is enough.

If you are a start up company or self employed then we will need to profile you in more detail, e.g. CVs, home address, references, etc.

Q. What are the differences between leasing and hire purchase?

VAT - With hire purchase, also called lease purchase, you pay all of the VAT up front but with leasing, VAT is applied to each instalment.

TAX - Both finance methods can be offset against your year-end taxable profits. With HP you can claim 25%, or possibly 40%, of the equipment cash price in the first year, then 25% in the second and this continues on a reducing balance each year. With leasing, all the lease payments you make in the financial year can be offset against your taxable profits for that year.

OWNERSHIP - At the end of a hire purchase agreement, title to the goods passes to you for a small transfer fee. At the end of a lease you have two options:

To continue leasing, but on an annual basis, for a cost of about 2% of the original price.
To gain title to the goods via a third party.

Q. Which is best for me, leasing or HP?

It depends on your cash or tax status, ask APT or ask your accountant!

Q. Is it not cheaper to borrow from my bank?

Sometimes, but not often. Also, banks tend to add conditions - sight of your management accounts each month, charge over your house or business assets, big deposits, etc. Whatever credit limit your bank thinks you are worth, using it up with equipment finance is not a good idea if you are likely to need a loan or overdraft in future. With a lease or HP agreement, all that your bank sees is a monthly direct debit and an additional bonus is that you are building a good credit record with another source of finance.

For further information,
please contact us or use the enquiry form


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