The benefits of finance for machinery purchases and some considerations to be aware of before deciding which package is best.
Flexibility in Finance
The benefits of finance for machinery purchases and some considerations to be aware of before deciding which package is best.
Today, flexibility and the whole life cost approach to machinery are considered high priority factors when acquiring a new asset. Many people are looking to use Kubota Finance as a means to acquire the machinery they need as it allows them to take advantage of flexible finance solutions which can be tailored to suit their needs.
There are a host of finance options available but not all will suit every customer. It’s therefore important to thoroughly research and understand all the options available before making the right choice. With Kubota Finance, customers can choose between four finance packages: hire purchase, operating lease, contract hire and finance lease.
Hire Purchase
Hire purchase is designed to put the customer in complete control. They decide how much deposit to set down (there will likely be a minimum amount), the length of the contract and how much their monthly payments will be. Importantly, at the end of the contract, the customer will own the machinery.
Hire purchase is a practical and flexible option as it allows people to spread the cost whilst still owning the machine. The desire for ownership is still important in the industry, so factors such as residual value will also be a part of the decision-making process too. For example, our ride-on mower and compact tractor ranges continue to lead the market, not just because of the quality and reliability that customers expect with Kubota, but also because the resale value of our machines is strong.
Operating Lease and Contract Hire
For the cheapest short term rental options and hassle free use, consideration should be given to operating lease and contract hire agreements. With these options you don’t own the machinery at the end of the agreement, but there are a number of key benefits.
With an operating lease, the asset and all payments due under the agreement sit off balance sheet, which can help to improve key accounting ratios.
Rental payments can also normally be offset against taxable profits, making it a cost efficient option. At the end of the agreement, the machinery is simply returned and if all return conditions are met, there is nothing more to pay.
Contract hire is normally exactly the same as operating lease but offers the additional benefit of regular servicing, maintenance and repair for peace of mind.
Finance Lease
The final option available under Kubota Finance is finance lease. This gives you access to the latest equipment for a regular sum that can be offset against taxable profits. With Finance Lease, the initial cost is very low because all payments are spread across the whole repayment period. Customers won’t own the machine at the end of the lease, but they will be able to offset the remaining value as a deposit towards new equipment if they want to upgrade in the future.
For some, the desire to buy the machinery outright will still be preferable over any finance agreement. If money is set aside on an annual basis for new machinery or machinery replacement then outright purchase does have its benefits.
That said, even if funds are available to cover the initial costs, finance should be considered. With finance, customers benefit from a reduced initial capital outlay. Monthly payments can be agreed to suit budgets often allowing customers to get a higher specification model in a way which may not be possible with an outright payment. Finance is also beneficial for customers who carry out seasonal work, as finance gives them the option of aligning their solution to their income across the seasons.
Whatever the choice, making a decision in consultation with your local dealer is recommended, as they will be able to help come up with a solution for your business needs.
To find out more about Kubota Finance visit http://www.kubotafinance.co.uk/
Kubota Finance is a trading style of BNP Paribas Leasing Solutions Limited, whose privacy policy is available here.
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