Why is leasing so popular? The basic reason is that you don't have to find the money to pay for your equipment upfront thereby conserving your cash.
This is particularly important for startups and growing businesses, where the finances are stretched.
“You can buy at today's prices with tomorrow's income,” says David Roberts, managing director of Capital Asset Finance.
The term of the lease can match the lifetime of the asset. Therefore a loan for a desktop computer can be structured to match its useful life – likely to be much shorter than the life of a machine tool.
Rather than trying to find the money in one lump sum, you can pay for the equipment over the whole period that you use it.
Unlike an overdraft there is no possibility of being forced to repay early and, generally, the agreements are set up with a fixed rate of interest so you won't get any nasty shocks if interest rate rise. So, cashflow planning is much more reliable.
“It is flexible finance. Flexible on terms, on repayment periods, flexible patterns and prices. There are all sorts of deals out there,” explained Craig Pickering, head of the asset finance division of the FLA.
“If you want a financial product tailored to what you are investing in pretty much any way you want it, it is out there,” says Pickering.