METHODS OF FINANCE - Leasing (SHORT AND LONG TERM)

Leasing - Allows a business to benefit from the use of an asset without owning it or buying it outright. This is a flexible form of finance, a regular monthly payment secures the use of an asset.

• The business pays a set amount in installments to lease the asset without owning it or buying it outright.
• The asset remains the property of the leasing company and at the end of the time period the asset is returned to the lease company and the business stops making payments.
• Avoids the need to finance the asset but may be more costly in the long run. However, the lease company is responsible for any repairs and maintenance.
• At the end of the lease period the business may start a new lease agreement for the latest model.
• Leasing reduces the need for finance at the outset but if the cash flow is unreliable the regular payments can be a problem.