AFN Equipment Finance

Operating Lease / Rental
Rental is a relatively new form of financing, which enables businesses to acquire new technology cost effectively rather than tying up cash. It also helps overcome equipment obsolescence.

Rental gives the customer all the benefits of the equipment without the risks associated with ownership. The only difference between rental (operating lease) and a normal finance lease is that with a rental the financier accepts the end of contract risk that the goods will be worth the residual due. With a finance lease the borrower guarantees that the goods will be worth the residual value.

Most equipment and goods can be financed by way of rental even computer software packages.

Key Benefits of Rental

Spread the cost over the useful life of the equipment.	With Rental, you spread the cost of the equipment over it's productive life - usually two to four years - by making easy monthly payments.
Conserve your working capital.	Why commit your vital working capital up front on equipment that may be rapidly obsolete, depreciate quickly and be difficult to sell? Rental gives you the ability to obtain new technology easily, without committing large capital sums.
Overcome capital budgetary constraints and get more equipment for your budget.	By spreading your budget, you can afford equipment with the performance that best suits your needs now and in the future. You don’t have to compromise on a lower performance option. You can get up to three times the equipment today with the same annual budget.
Greater Flexibility.	Unlike a loan or a finance lease, you can choose a three year rental term and then upgrade to the latest technology after, say two years, often without any significant increase in the monthly rental by entering into a new rental agreement.
Rental upgrade facility allows you to:	Enhance or modify your equipment with current technology. Add equipment components to the rental plan any time during the rental period. Increase your systems size to meet growth in your business operations.
Off balance sheet funding.	Unlike a loan or a finance lease, your rental agreement does not appear on your balance sheet as a liability. The monthly payments are simply treated as an operating expense and are usually 100% tax deductible. Consult your accountant if in doubt. Hence business gearing and return on assets employed usually improve. This can also improve your company's position when you need to borrow.
End of term options.	Continue to rent at the same rental amount or, re-rent for a further fixed term at a reduced rental. Upgrade to the latest technology. Return equipment with no residual obligation Offer to purchase the equipment at fair market value.