If it appreciates
…buy it,

If it depreciates
…lease it!

~ J. Paul Getty


A finance lease is a funding method that enables companies and business professionals to acquire capital assets for business use, without the need for capital outlay.

The financier leases the equipment to the client for an agreed timeframe in return for a series of rental payments which can be structured to suit the company’s cash flow.

For tax purposes, the lease is usually considered a "conditional sales contract". A lease agreement sets out the desired term of the lease, the negotiated rental repayments and the residual value of the leased equipment. Providing the equipment is used to produce assessable income, the lease rentals are usually tax-deductible.

In some cases, existing capital assets can also be financed in this way.

This funding method suits the finance requirements of most private companies and is also used by many public companies.

Key Features

Generally two to five years, although longer terms may be negotiated.

Payment Options:
Usually fixed payments made monthly, quarterly, semi-annually, or annually, to suit the client’s cash flow. Irregular repayments are also possible. A residual at the end of the contract is a mandatory feature of a finance lease. Payments are made by direct debit.

Usually, the asset being purchased provides the sole security.

At the end of the contract:
When the lease expires, the lessee may purchase the equipment or refinance the residual value for a specified term.

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