PRODUCTS

The following information is for information only and should not be interpreted as advice, please contact the appropriate parties for specific advice on any of the following products.

Hire Purchase & Leasing Purchase
Finance Lease
Refinance
 
Leasing and hire purchase are financial facilities which allow a business to use an asset over a fixed period, in return for regular payments. The business customer chooses the equipment it requires and Liberty buys it on behalf of the business. Monthly payments are effectively secured against the asset/vehicle.
 
A typical Lease/Hire Purchase or Finance Lease agreement will last from two to four years.
 
Hire Purchase & Lease Purchase 
With Hire Purchase, after all the payments have been made including the Option to Purchase Fee the client becomes the owner of the equipment. For tax purposes, from the beginning of the agreement the client is treated as the owner of the equipment and so can claim capital allowances. The client will be responsible for maintenance and insurance of the equipment.
 
Lease Purchase is identical to Hire Purchase in many ways, at the end of the agreement, the customer has an option to buy the asset without a return option, with prestige cars a final ‘balloon’ rental can be arranged.
 
Here are its main advantages:

•  Luxury/prestige vehicles - Lease/Hire Purchase is very well suited to the    finance of high-class vehicles due to the fact that a ‘balloon’ rental can be
   arranged at the end of the agreement which can facilitate lower monthly
   repayments

•  Company assets - Lease/Hire purchase is ideal for companies that want
   to retain the asset/vehicle as an asset at the end of the agreement, also
   the government “Annual Investment Allowance” can provide tax benefits.

•  It frees up capital and other finance facilities.

•  Balance sheet - The vehicle can appear as a balance sheet item and you
•  can write down the value against taxable profits.

•  Ownership - Once any Option to Purchase and/or Balloon payment
•  is made, the asset/vehicle becomes property of the client

•  Certainty - The regular nature of the payments and their fixed amount helps
•  a business to forecast cash flow. The business is able to compare the
•  payments with the expected revenue and profits generated by the use of the
•  asset.

•  VAT – For business use assets on VAT registered business, the total VAT
•  can be reclaimed.

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Finance Lease 
A finance lease is usually accessed by VAT-registered businesses and companies. It is offered to businesses where a moveable asset is purchased from a supplier – the business can then use this asset while paying an effective rental + VAT rather than a repayment.
 
The fundamental characteristic of a lease is that ownership never passes to the client. The client can generally deduct the full cost of lease rentals from taxable income, as a trading expense. As with hire purchase, the client is responsible for maintenance of the equipment.
 
The finance lease which Liberty can offer is closest to the hire purchase alternative. Liberty recovers the full cost of the equipment, plus charges, over the period of the lease. Although the client does not own the equipment, they have most of the 'risks and rewards' associated with ownership. They are responsible for maintaining and insuring the asset and must show the leased asset on their balance sheet as a capital item.
 
When the primary lease period ends, either a Secondary lease period commences or, if the client wishes to stop using the equipment, it may be sold second-hand to an unrelated third party. The client arranges the sale on behalf of the Liberty and we return the sale proceeds less retention.
 
Some of the benefits to acquiring a finance lease include:
 
•  VAT on rentals – VAT on the rentals can be reclaimed for VAT
•  registered usiness (varies for personal use vehicles).

•  Balance sheet – Taking out a finance lease allows you to feature the
•  vehicle on your balance sheet.

•  Sales proceeds – You can boost your equity by receiving a proportion of
•  the sale at the end of the finance lease term.

•  Fixed Primary Rentals – The rentals are fixed during the primary rental
•  period allowing the client to forecast cash flow and compare the expected
•  revenue and profits generated by the use of the asset.

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Refinance 
By releasing capital tied up in fixed assets we can help improve cash flow and stability for your business. Funds can be used to recover from bad debt, reduce bank overdrafts or to restructure existing agreements and release the equity. The injection of working capital can fund expansion of the business or to fund management buy ins/outs. We can also arrange a refinance agreement to fund a ‘balloon rental’ to become due on a vehicle.
 
Refinance agreements can be written on a “Sale and Leaseback” or “Sale and Lease Purchase Back” basis.

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