What is equipment leasing?
In legal terms, a lease is a contract that gives a particular the right to use an object (a vehicle in general) for a certain amount of time. This alternative can also apply to all kind of investment material, like for example, construction equipment or agricultural vehicles. The leasing society or the bank, purchases the wished equipment and becomes its owner. The financial insitution then gives its client the right to use the good for a duration up to six years and on the other hand, the user has to pay lease monthly payments to the bank. At the end of the agreed duration, the client can usually purchase the equipment at a good price thanks to its residual value.
Keeping your liquid assets
This solution is getting more and more popular with Swiss societies because it allows them to generate investment returns thanks to the new equipement, without having to burden their budget. The company is then financially more flexible for new investments and increases its competitiveness, while accessing the latest technology. Which other advantages come with an equipment leasing?
- Takes the pressure off the balance sheet and increases the return on equity.
- Facilitates the budget planning thanks to leasing monthly payments.
- Gives access to the latest technology right now, when the funds for a cash payment are not sufficient yet.
What should you pay attention to?
In the case of an equipment leasing, you should consider the firm’s ability to reimburse the monthly payments on the whole duration. If the society is able to pay the new equipment directly instead of making a lease contract, it could be interesting to take the following points into consideration.
- A leasing contract can’t be broken (you will have to pay in case of an early contract termination).
- The user is responsible for the equipment risks like if he paid it.
- During the contract duration, the client is not the equipment’s owner.
A bright future for the market
The equipment leasing’s sector is experiencing a strong growth because it allows entrepreneurs to have access to new opportunities. No matter which equipment your SME needs, (machine, vehicle, equipment,…) you should learn more about this financing alternative. A leader society in the equipment leasing Swiss sector like Pro-Leasing (French), will be able to advise you and offer you a free quote, that will be tailored to you company’s needs!
Article written by Multicredit
