Equipment Rental is an agreement between a financier and a customer whereby the financier buys the equipment on behalf of the customer and rents it back to them over a fixed period.
The customer simply makes fixed monthly rent payments, and at the end of the contract either hands back the equipment to the financier (with no more to pay), continues the rental agreement or buys the equipment outright at market value.
Equipment Rental has a number of benefits to the end user, such as:
- Flexible contract terms
- Fixed interest rates
- Fixed monthly rentals
- Costs are known in advance
- Can be more cost effective than paying “cash”, especially for equipment that has a short useful life
- A residual can be applied in some cases, lowering monthly payments
- Your equipment is “off balance sheet”
- Rental payments can be claimed as a tax deduction, which can be more tax effective than other forms of finance.
- Rented equipment is not considered to be a business asset (or the debt a business liability)
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