Leasing and finance options for air compressors

An honest analysis of purchasing options

In this example we offer our most popular air compressor
The Genesis 11/08
11KW Rotary Screw Air Compressor
Integral dryer, filtration & air receiver

Costings

Cash price	Borrowing	Leasing
Total cost £3720.00 Single Payment	Total cost £3951.60 Over 2 years £164.65/month* (Setup fees vary) * Monthly rate will vary according to interest rates and bank charges	Total cost £4080.00 Over 2 Years £141.67/month Includes (Setup fee - £595) (Title fee - £85) payable at end of lease agreement

Benefits & Drawbacks

Leasing
• Payment period to match asset use period and is paid out of the income it generates
• Leasing rental 100% deductible against tax and is offset throughout the period and deducted as an operating expense.
• You can use your cash or bank funding for working capital to increase cash flow and profitability
• Easy, accurate budgeting for profit and loss and cash flow
• You may have access to a higher standard of equipment which may be prohibitive if you chose to buy outright.
• You can spread the cost over various periods of time to suit your needs and income.
• It can be more expensive than if you brought the equipment outright
• Your business maybe locked into inflexible agreements which may be difficult to terminate

Borrowing
• You can claim capital allowances against corporation tax although capital allowance restriction means that effectively it may take some years to ultimately offset the allowances
• At present, for small and medium sized businesses, capital purchases (Up to £50,000 total per year) can be fully written off against taxable profits in the first year.
• May restrict further borrowing from bank lines
• There will be an interest cost which may vary with interest rate changes
• Overdrafts can be withdrawn at short notice.

Cash
• You will almost certainly pay less overall than a finance agreement or loan
• Cash flow has a negative impact
• You can claim capital allowances although capital allowance restriction means that effectively it may take up to 10 years to ultimately offset the allowances
• At present, for small and medium sized businesses, capital purchases (Up to £50,000 total per year) can be fully written off against taxable profits in the first year.
• Easy accurate budgeting for cash flow
• The working capital used cannot be employed for other profitable purposes.

For further information on leasing compressed air equipment