Hire-purchase, leasing or purchase – how you finance excavators, transporters and co. Clever financing

When it comes to replacing expensive vehicles, expanding the fleet or adapting to technological standards, companies are faced with high costs. There are many ways to manage these costs. But what really matters to companies is how quickly they can use the vehicle. Reasons that supposedly speak in favor of purchasing and against leasing and hire-purchase at this point are the confusing leasing landscape and lack of information. However, aspects such as time savings and the idea of ownership also speak in favor of purchasing at first glance. But with an immediate purchase, the vehicle is capitalized on the buyer’s balance sheet, liquidity is suddenly reduced and the possibility of returning the vehicle – as is the case with leasing – does not exist.

Hire-purchase, leasing or purchase: in the following, we show you why leasing and hire-purchase offers via FM leasing partners are more advantageous than purchase and what costs you should reckon with.

Leasing: flexible and individual financing

Whether it’s a mini-excavator, refrigerated truck, truck or company car – leasing is often the first thought when it comes to financing a vehicle. In 2019, for example, 40 percent of all newly registered cars and commercial vehicles used for commercial purposes with an investment volume of almost 44 billion euros were leased. This is the result of a study by the Federal Association of German Leasing Companies (bundesverband deutscher leasingunternehmen).

The advantages of leasing are obvious. Compared to other financing options, financing by leasing can be structured very flexibly. For example, rates can be adjusted for seasonal fluctuations. For the lessee, this could mean that repayments can be minimized in months when there is less work to be done. In addition to the payment schedule, the terms can also be individually adapted to the needs of the lessee. Another advantage is that the equity ratio remains the same, since the vehicle is capitalized off the lessee’s balance sheet. This means that the balance sheet structure remains stable due to balance sheet neutrality.

Another advantage of lease financing is that it gives the lessee greater financial flexibility in the future. Because the leasing company takes over the financing. In addition, the leasing installments are usually paid from the income generated by the purchased equipment. In line with the "pay as you earn" principle, the vehicle virtually pays for itself. Tax aspects are also worth mentioning. The installments are fully tax-deductible as operating expenses. In addition to the planning security provided – because both the installments and the term of the contract are fixed – there is also independence from the house bank. the various options at the end of a leasing contract also speak in favor of leasing as a financing solution. The lessee can decide whether to return the leased item, extend the contract, or buy the vehicle and make it his own.

Important: get an overview (or have it done)

But in spite of the above advantages, those interested in leasing should not act hastily. For everything to go well at the end of the contract, it is necessary to have a financing partner who can really advise and implement the particular financing request of its customer well. In addition, excessive final payments at the end of the contract term are to be avoided on a regular basis. The choice of a serious and competent lessor with a reliable end-of-life arrangement is therefore essential.
FM finds from a network consisting of more than 35 leasing companies and financial service providers, the most suitable financing offer for your concern and operational needs.

Vehicle leasing cost overview:

  • Optional down payment
  • Transfer and registration
  • Monthly leasing rate
  • Insurance
  • Car tax
  • Inspections and maintenance

For the mediation of a suitable leasing company via FM leasing partners there are no further costs for you, because we live from the commissions of the leasing companies. For more detailed calculations, simply use the quick calculator from leasingo – a company of the FM group. We will also be happy to advise you personally.

lease-purchase: guaranteed ownership at the end of the term

Hire-purchase is a modified form of loan financing offered by banks. With this combination of rental and purchase contract, the acquisition costs are spread over the contractually fixed monthly installments. the lease buyer acquires economic ownership from the first installment onwards. With the payment of the last installment, the vehicle then becomes the legal property of the rental buyer. Compared to the immediate purchase, the incentive for the rental buyer is the easier affordability. The constant rates also create a certain planning certainty. In contrast to leasing, the lease-purchaser capitalizes the leased item.

Cost overview vehicle installment plan:

  • Installment
  • Total vat with the first rate
  • If applicable. Increased final rate
  • Transfer and registration
  • Insurance
  • Car tax
  • Inspections and maintenance

the input tax paid with the first installment can, however, be reclaimed in the context of the next advance sales tax return. The installment payment is usually somewhat higher with the installment plan than with leasing. Here, too, you can determine the hire-purchase rate free of charge and without obligation using the leasingo quick calculator or contact our FM team personally.

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