Finance Leasing
The primary purpose of a finance lease is to help your company finance the acquisition of an asset or equipment
Instalments paid under the lease repay the cost of the asset plus a return on capital to the lessor
The lessee
The lessee has economic ownership of the asset.
Including the benefit of any residual value left in the asset once financing has been repaid, while the legal ownership remains with the lessor
HOW DOES A FINANCE LEASE WORK?
- Possession of the asset during the main part of its economic life.
- Asset is kept maintained and insured against loss or damage.
- Be entitled to the manufacturer’s warranties and after sales services.
Under a finance lease contract, the title to the asset will remain with the Lessor.
At the end of the lease term, the lessee has the right to acquire the asset for a small residual sum, or alternatively, the lessor may sell the asset
Benefits of entering into a finance lease agreement with us:
Your company is regarded as having the economic ownership of the leased asset or equipment, including the benefit of any residual value left in the asset once the financing has been repaid, while the legal ownership remains with the us.
- Lower upfront costs, compared to buying equipment outright.
- Flexible terms of payment: the customer can decide together with the leasing company to adapt monthly instalments based on the initial down payment and the duration of the contract .
- Easy access to upgraded and up to date equipment (avoid obsolete machines).
- Entitlement to the manufacturer’s warranties and after sales services.
- By deducting your leasing costs as a business expense, you benefit from and income tax break.
- Lease payments may qualify a business for deductions on their tax return, which essentially reduces the net cost of the lease
Fiscal Benefits
Financial Lease provides great tax benefits for the lessee through depreciation and interest expense inclusion in their books. Leasing costs can be deducted as a business expense.
- Lessee is allowed to claim depreciation on the asset, which reduces taxable income
- Interest expense also reduces taxable income