The true worth of an asset is best measured by the income it generates over a period of time. Modern machinery, computers, office equipment, vehicles and materials handling systems provide means of increasing productivity, efficiency and profit. But it is just as important to finance such assets as cost efficiently as possible.

When you pay cash for new equipment you pay for the services it offers in advance out of after taxed profits rather than pre-tax earnings.

What can be Leased?

Virtually any identifiable depreciating asset is leasable. The maximum advantage of leasing is yielded by income producing assets. The most commonly leased items include motor cars, utilities and trucks (single units and fleets); forklift trucks and materials handling systems; construction, earthmoving and mining equipment; engineering and industrial plant; medical and dental equipment, computers and word processors, agricultural plant; and other specialist equipment.

Who can Lease?

Any soundly capitalised business from small firms to large corporations, established businessmen, professional persons and farmers.

How does Leasing work?

The Lessor aggrees to lease you (the Lessee) the equipment for a fixed period, usually between three and five years at a fixed rental, normally paid monthly. However, rentals may in some cases be paid quarterly, half-yearly or may be tailored to suit your profit and/or cash flow patterns.

When the lease is negotiated an estimated value for the goods at the end of the lease period is agreed - known as the residual value. The value considers make, model, intended use and the depreciation rate specified by the Commissioner of Taxation.

Arranging a Lease is Simple

Once you have selected the equipment you require either contact Leasepac Financial Services' specialist leasing staff to arrange the transaction or have the supplier contact us.

Leasepac Financial Services will arrange a lease plan best suited to your requirements and on completion of documentation, will arrange to pay the supplier who will deliver the goods. If you have traded goods the trade-in consideration is paid directly to you by the supplier.

What happens on Expiry?

The lease may be renewed or the equipment may be returned to the Lessor (the financier) for sale. If it fails to realise the residual value, you, the Lessee must pay the difference. Alternatively, the Lessee may offer to purchase the leased equipment at a price not less than the residual value.

If the goods are to be updated the Lessor will usually trade the existing asset and after settlement of the residual value on the expired lease any surplus or discounts may be considered in negotiating the new lease.

Why Lease?

+A lease does not require a deposit and gives immediate access to profit making plant and equipment. Working Capital is left intact for other requirements such as stock purchases, advertising or sales promotion.
+ Leasing helps maintain existing credit lines (it is often an additional source of funding).
+Leasing simplifies accounting as no  depreciation is accumulated year to year. Cash Flow Projections are simplified by regular certain equipment costing.
+With Inflation the cost of your rental dollar reduces over the lease term.
+Collateral security in most cases is not required, leaving it available for other credit lines.
+Rentals can be structured to your requirements more easily than with other types of finance.
+Tax deferment advantages may accrue as leasing can accelerate tax deductions.

Taxations Advantages

Providing the equipment is used solely for producing assessable income, the total rental is usually tax deductible. In a term-finance transaction the tax deduction is limited to the interest charges and the normal depreciation; cash purchase affords a deduction of only the depreciation. The residual value is generally intended to reflect the realistic estimate of the future value of the asset, often it can be set below the normal written down value and can represent a greater tax saving that outright purchase.

Should you be Leasing?

Leasing offers extraordinary flexibility and because of this flexibility as a means of acquiring income earning equipment each potential leasing situation should be considered carefully and expertly to ensure full advantage for you, the Lessee.

Basically leasing is beneficial to those businesses that can tax deduct rentals for tax purposes, afford the lease rental payments and invest the conserved funds more profitably.

Leasepac Financial Services' specialist leasing staff can advise you on the best financing alternative to suit your needs - leasing or term finance. We can also show you how a leasing or term finance plan can be specifically tailored to your needs.

Make an appointment with a Leasepac Financial Services leasing advisor by phoning (03) 9820 2984 to discover the most competitive leasing terms.

To apply now for an equipment finance loan click here or contact us for more information on (03)9820-2984.

"Leasepac's aim is to obtain the best possible loan for their clients and to create a financial environment that will maximise their future income and minimise their repayments. "