As is the case with car deals, a lease purchase lets you eventually own the equipment outright. Once the agreement goes into effect, you pay the total VAT due as well as the initial deposit or down payment – after which you make fixed payments each month over an agreed upon timeframe. This could be anywhere between 2-8 years, with interest fees set against your taxable income.
Why do businesses need to lease equipment? When you lease-purchase forklifts, warehouse equipment and utility vehicles, you can show it as an asset on your balance sheet, which means you can offset your capital allowances against taxable income at the typically 25% per annum rate on your reducing balance. However, small businesses can offset this equipment value by 40% in the first year.
As is the case with a contractual hire, repairs and maintenance are not included in your lease purchase price. Still, a lease-purchase for your desired materials handling and warehouse equipment is an ideal option if you need to start using the equipment for your business, but lack the resources to purchase in one lump sum.
Lease purchase made easy
At Forktruck Solutions, we want to ensure that you can take full ownership of your desired lifting equipment in the shortest time frame possible while also enjoying the most tax benefits.
Our sole aim is to make your life as a business owner easier. If you feel that your business would benefit the most from a new forklift truck and lifting equipment, then there’s no need to bear the burden of the entire cost upfront. It’s not surprising to know that at least 60% of small-medium sized British businesses are using asset finance to fund their investments.
If you’ve never lease-purchased equipment for your business before, here’s how it works -
- Choose the model/equipment you require along with a suitable repayment time frame
- Agree to a repayment amount that suits your budget
- Put down an initial deposit or down payment to begin your agreement
- The balance is divided into equal increments throughout the term and you own your forklift equipment once the final payment has been made
Benefits of Lease Purchasing
If you’ve decided to lease purchase trucks and lifting equipment for your business, then know that in doing so, you will enjoy numerous benefits such as -
- Lease purchasing equipment means you can sell it later – a valuable way to gain good returns on your investment, depending on how well you’ve maintained it as well as the forklift’s residual value at the time.
- Buying equipment over several months also means that you get to enjoy better ROIs, compared to long-term rentals, because rental fees are notably higher than financing costs each month.
Purchasing vehicles over a set period means that you can make modifications to your heart’s content – something which you simply can’t do with a leased or rented equipment for your business. When you order a new vehicle, you can modify it through many factory-installed options that can be tailored to your unique business applications.
Lease purchased equipment, unlike leased or rented, is eligible for tax deductions and you can also reclaim VAT, if VAT-registered, that is. In some cases, you can even claim capital allowances and offset repayment interest fees against profits.
With fixed, regular payments, you can budget easily and even choose how you structure those payments. Additional security is also not needed, while the lease-purchase agreement is not payable on demand if all repayment conditions are satisfied – unlike many bank loans.
Contact us now to lease purchase your forklift truck or If you have any questions.