Introduction to leasing

Asset finance or leasing is a way of purchasing equipment, machinery or other assets without having to pay the full amount upfront.

There are various different structures that can be used and the attraction of each one will vary according to your requirements and, perhaps, according to tax changes made by the government.

In essence, a lease is an agreement between you (the lessee) and the finance company (the lessor). You will pay a periodic fee, usually monthly, for the use and possibly ownership of equipment.

The range of equipment that can be bought under a lease is expanding rapidly – from the most basic purchase, such as office computers or company cars, to more specialised equipment, such as a forklift truck or a safe.

This is partly due to the fact that the number of companies providing this service has expanded rapidly. Not only do most banks and a number of specialised finance houses offer this service, but there have also been a growing number of equipment manufacturers entering the market. It is now possible to lease your office computer direct from Dell, Compaq and IBM among others.

In fact, the Finance and Leasing Association (FLA) estimates that some 15% of office equipment is financed through a lease. The FLA also expects the market to continue growing gradually but notes that the business is always dependent upon the latest tax and accounting changes.