Finance Benefits
Our agreements can be useful in terms of planning machinery replacement periods and can be used with both new and used equipment
In the case of a pure lease the legal title remains with the finance company and never passes to the customer. Within the groundcare equipment sector there are principally two types of lease: operating lease and contract hire.
These are both forms of off balance sheet finance which are in essence long term rental agreements giving certainty and visibility in terms of budgeting and cost ownership. These agreements can be useful in terms of planning machinery replacement periods and can be used with both new and used equipment.
Operating Lease
Operating Leases are simple rental agreements which cover a proportion of an assets life. Under an operating lease a future value is set for the machine based on its expected value at the end of the lease term. This figure is deducted from the balance when calculating the rental payments, reducing their size and total commitment compared to a similar finance lease or hire purchase agreement.
Whereas Hire Purchase and Finance Leases are typically over terms that match either the entire or the majority of a life of an asset, an Operating Lease typically only covers a proportion of the assets life.
Rentals are charges as operating costs to the profit and loss account and the finance liability does not appear on the balance sheet.
Contract Hire
Contract Hire is simple, comprehensive and cost effective. It is now the most popular method of funding equipment purchases in general and its popularity is growing in the groundcare equipment sector.
Low deposits with fixed monthly payments cover the cost of the equipment throughout the length of the agreement. Typically maintenance is also included in the contract, and depending upon the level of cover agreed these can cover the cost of all servicing, tyres and breakdowns too. Contract Hire allows the businesses to accurately budget the full cost of their equipment and can also offer more flexibility to change equipment if user requirements change over time.
Contracts can be tailor made for your business, from short term 1-3 months deals to more typical 36 or 48 month agreements, with any usage levels being taken into consideration.
Contract Hire rentals (payments) are treated as an operating expense that can be charged against taxable profits. VAT is reclaimed on the finance and maintenance elements.
The monthly rentals are based on the vehicle price; usage and length of contract required. At the end of the term the goods are simply handed back to SGM or an extension rental can be negotiated.
Why Contract Hire ?
For further details please contact us on 0800 432 0440 or via email
