1Why Rent?
Renting conserves your cash and working capital. Cash is not tied up in equipment. Instead, money is available for opportunities such as marketing, working capital, or seasonal cash flow needs.
2I already have credit lines in place for the business that preserves capital, why do I need to rent?
Renting is "off balance sheet financing" and therefore does not appear as a debt on your balance sheet. Your existing lines of credit and borrowing availability are left untouched, ready to use for operational and short-term financing needs.
3Why don’t I pay up front and claim the depreciation?
Business equipment such as computers will often drop in value faster than depreciation rates. In addition, the equipment return on investment or operating efficiencies are delivered over time, so why not pay as the benefits are delivered (over time) and deploy business capital in more profitable areas?
4Is there any tax advantage when renting?
Renting may provide a variety of tax advantages. When you acquire equipment, the goods are used to earn assessable income, both the interest paid, and the depreciation of the equipment may be tax deductible.
For example computer equipment with a purchase value of $5,000 rented over 36 months (after typical company tax deductions of 30% are applied), will cost the business approximately $4,238.00 over the term. See your accountant for further advice.
5We operate on a tight budget, how can renting help?
Renting overcomes budget limitations. In situations where limited budgets would ordinarily delay or prevent the acquisition of equipment due to a limit on capital expenditures, leasing allows for quick budget approval due to its small monthly expense. A lease can fit the tightest of budgetary constraints.
6What is the interest rate?
The agreement is a rental agreement; not a loan or hire purchase agreement, therefore you pay a monthly rental amount for the equipment, not interest. Renting is tax effective.
7What is the duration of rental term?
You can rent from 24 – 48 months, depending on the equipment and your requirements. Many clients elect to rent for 4 years knowing that the monthly payments have a minimal effect on cash flow and they can upgrade before the end of the term.
8What happens at the end of the rental agreement?
At the end of the term of the agreement, you have several options. You can:
• Upgrade the equipment under a new rental agreement
• Continue to rent the equipment on a casual basis
• Rent for a further specified term at a reduced rental
• Return the goods with no further obligation
• Offer to purchase the goods
• Upgrade the equipment under a new rental agreement
• Continue to rent the equipment on a casual basis
• Rent for a further specified term at a reduced rental
• Return the goods with no further obligation
• Offer to purchase the goods
9What if I want to upgrade before the end of the rental agreement?
Renting eliminates equipment obsolescence. Renting lets you regularly upgrade your equipment to a state-of-the-art level, eliminating the inefficiencies of owning outdated equipment.
10How does renting overcome budget limitations?
In situations where limited budgets would ordinarily delay or prevent the acquisition of equipment due to a limit on capital expenditures, renting allows for off balance sheet budget approval. A lease can fit the tightest of budgetary constraints.
11Who else is renting equipment?
Eight out of ten businesses use leasing to acquire equipment. Renting is a smarter lease that is well suited to equipment with a short shelf life, such as computers.