FAQ’s – Asset Finance (Lease)

What is a lease?
A lease agreement is a contract between you, ‘the customer’, and a leasing company. This enables you to have and use a piece of equipment over a period of time on payment of rentals to the leasing company. With a typical lease agreement, you make a series of regular payments (usually on a monthly basis), thus helping cash flow, as opposed to a large capital outlay for the equipment. You wont have a depreciating asset on your books, and can benefit from the tax advantages of paying a lease rental.

Are there tax benefits associated with leasing?
Yes, any finance lease rental payment are tax deductible against your profits, therefore attract tax relief for the full duration of your lease agreement. Your accountant should know how this can reduce your overall tax bill. In the case of a hire purchase you, the lessee, are able to claim full capital allowances on the full value of the asset from day one. This can be used to reduce taxable profits and in turn any resulting cooperation tax liability/payment

Who do you lend to?
We work with sole-traders, partnerships, limited companies, public bodies, professionals, individuals

Why would I not use cash?
Capital is a valuable asset itself in a business. By using asset finance, you can acquire the assets you need, achieve potential tax incentives and have little impact on cash flow as well as accelerating the return on investment quickly. Asset finance allows you to hold onto valuable capital and invest it in other areas of your business.

Do I need to pay a deposit?
One of the main benefits of a lease is that there is no need to find a large, cash deposit if you don’t wish to pay one. You can, of course, make an initial payment which will typically be equivalent to 1 monthly repayment. With Hire Purchases, VAT must also be paid upfront.

Will I own the equipment at the end?
Yes you can. Subject to satisfactory completion of the agreement, you may nominate a 3rd party of your choice to buy the machine at the end of the lease, for a nominal one off fee no greater than one additional months rental.

Is there a penalty if I decide to settle early?
No. In the instance of a Hire Purchase, we ask that the outstanding payments are settled and, in return, we provide a small early settlement discount. In the instance of a lease, you can sell the equipment to a 3rd party of your choice or return equipment at your expense. Again, with repayment of all outstanding rentals, at the time of settlement.

What about VAT?
Rentals attract VAT. This can be reclaimed if you are VAT registered. Please speak directly with your accountant.

Can equipment be upgraded?
Yes. The equipment can be upgraded during the course of the agreement. Please speak with us directly to discuss.

Do I need to insure the asset/s?
Yes; as soon as you take delivery of the assets you are obliged under the terms of the agreement to insure it against loss or damage. With all asset finance agreements, you will be asked to provide details of your insurance policy and should you not have insurance, this will be set up for you by the lenders nominated third party insurance provider, who will contact you by post.

How can I discuss finance or obtain a quotation?
You can obtain information about how asset finance can help you by speaking with us directly. We can provide you with a personalised quotation or alternatively you can learn more about our facilities via our website www.cmf-ltd.co.uk.

What are the consequences of non-payment?
Failure to maintain your monthly repayments can result in the financed equipment having to be returned. You may be liable for any outstanding balance following sale of the equipment.

We are happy to answer questions you may have before you decide to apply. You can call us on 01928 739 712 or REQUEST A CALL BACK