Jade Equipment Finance offers Equipment Rental as an ‘off balance sheet’ loan product for the purchase of business equipment. With this type of financing, the lender, ie financier, purchases the equipment and rents it to the borrower over the fixed term of the loan.
As the lender and not the borrower has made the purchase, the asset remains on the lender’s balance sheet, not the borrower’s balance sheet. This can be a particularly attractive accounting method for many businesses. We advise you discuss this with your accountant in regard to suitability for your business.
The ownership of the machinery is retained by the lender, while the borrower has full use of the equipment and is responsible for the operating costs.
Equipment Rental Key Features
- Rental finance agreements are negotiated with the renowned Jade better equipment loan interest rates.
- Fixed interest rate for the term of the rental agreement.
- Fixed monthly repayments.
- A buy – payable when the monthly repayments are finalised.
- Flexible terms of up to 6 years/72 months.
- ‘Off balance sheet’ item. The repayments are accounted for as an operating expense but the asset/liability does not appear on the borrower’s balance sheet.
- GST can be claimed by the borrower on the monthly repayments. (If business is registered for GST)
- Monthly repayments are tax deductible as a business expense.
Finalising an Equipment Rental Agreement
As distinctly different from a Asset Chattel Mortgage for example, at the conclusion of the rental agreement, the lender retains ownership of the equipment. At that that time, the borrower and lender can negotiate a settlement, with several options available:-
- Borrower negotiates a purchase price to buy out the equipment from the lender.
- This purchase may be ‘re-financed’, speak with your Jade consultant.
- A new equipment rental agreement can be commenced.
- The lender exerts ownership over the equipment and the borrower returns the goods to the lender and the rental ends.
- The rental could have a buyback amount option at the end of the term which when paid
This type of finance product may allow businesses to regularly upgrade equipment more often without the burden of disposing of old or superfluous equipment. It may also be particularly suitable for businesses engaged in work on a project basis.
Your Jade Equipment Finance Consultant is readily available to explain exactly how Equipment Rental works as a commercial finance option for the purchase of a wide range of equipment in many industries.
Speak with a Jade Consultant to discuss an Equipment Rental for your proposed equipment purchase. Call 1300 000 003