The 6 most common misconceptions of leasing

Johnson Reed
3m read

Venturing down the finance route can initially seem a little daunting, typically associated with credit checks, tedious paperwork and onerous conditions. Whilst this may have been your experience with banks and finance houses in the past, this certainly doesn’t need to be the case. At Johnson Reed, we understand the time constraints and daily pressures of running a business, and facilitate your finance requirements in a quick, simple and fuss-free manner.

Here are some of the most common misconceptions we hear from business owners when they’re considering leasing, and why they’re not always correct.

1. “Leasing won’t allow me to take ownership of the asset” – Depending on the type of agreement you have, there are options available at the end of the term. If the agreement allows, you may be able to pay a one-off fee for the asset, usually the equivalent to one of your repayments. Some agreements also offer the option to upgrade, helping you stay at the forefront of your competitive industry and keep up-to-date with constantly-evolving technology.

2. “I’m not struggling financially so I don’t need to use finance” – Applying for finance sometimes comes with a negative stigma, but in fact many of our clients use our facilities as tools to help strengthen their business, not to combat a financial weakness. Leasing is a valuable tool regardless of the size or stage of your business, allowing you to purchase your desired equipment without the prohibitive effect on cash flow. The tax-efficiencies alone make leasing the purchase method of choice for many business owners.

3. “I can’t finance the equipment I need” – Whilst the bank and traditional lenders might decline finance applications for ‘non-standard’ assets or those with little residual value, Johnson Reed specialise in ‘Quirky Kit Finance’, whether that’s bespoke software or a children’s soft play structure! In addition, we can finance all your fixtures, fittings and ancillary costs; essentially a ‘one-stop shop’ for all your equipment and project costs!

4. “It’s too time consuming” – Whilst bank loan applications can sometimes go weeks without any response, leasing is a different matter entirely. We can get everything we need from a simple phone call and help build your application, returning a decision within just a couple of hours in some cases! We work in conjunction with your suppliers and project deadlines to be as efficient as possible.

5. “I don’t trust finance companies” – You know the details of your agreement before you sign, including your repayment schedule, so you can accommodate the cost in your budget and plan ahead confidently. Whilst some bank facilities and overdrafts are repayable on demand (always read the small print!) your lease facility is fixed until the end of the term, providing all payments are made on time. We like to ensure customers know exactly what to expect and don’t encounter any hidden surprises!

6. “It’s expensive” – Whilst our rates are rarely as competitive as secured lending/mortgage finance usually provided by the bank, there are many reasons why leasing is the more favourable – and often more economic – choice. It’s often thought that the accumulation of all the repayments will exceed the original value of the asset, but the tax savings allowable throughout the term usually offset this. What’s more, with a lease you’re paying for the equipment in small instalments as you’re using and it and (hopefully!) generating a profit, meaning you’re likely to break even on your investment sooner.

Anything we’ve missed? Comment below and we’ll do our best to address your concerns!