PURPOSE and BENEFITS OF LEASING

For rail freight operators, leasing allows you to acquire assets for the business, without the need to raise capital either from cash reserves or bank borrowing. Lease payments are spread over a term often matching the working life of the asset.

For manufacturers and suppliers of rail equipment, Rail Division can finance the sale of equipment to your client which gives you the benefit of outright sale and gives your client the benefits of non-bank financing and cash flow management. Lease finance is also available for equipment used in the manufacturing process.

By arrangement, Rail Division can partner with you to enable you to offer customers the option of sale or lease of new equipment as part of your customer sale proposition.

For the track construction and maintenance industry, lease finance allows the costs of buying new equipment to be amortised over the life of a contract, preserving cash for business working capital needs, and conserving bank credit facilities.

FINANCING OPTIONS for the RAIL INDUSTRY

Popular with business is an Operating Lease. Lease rentals are treated as deductible expenses as they are paid. Leases which are categorised as operating leases may not need to be included on balance sheet. An attractive benefit of an operating lease is that risk in the value of the asset at the end of the lease is carried by the financier.

Many companies use Term Rental Finance to fund assets that are subject to a high rate of obsolescence. Rentals under this facility are fully expensed. The funding arrangements are flexible, allowing assets to be upgraded or supplemented to match technology improvements.

Finance leases have long been a traditional method of financing assets that have a long life and retain their value well. Capital is preserved and lease rentals are deductible for tax purposes.

Asset Purchase (CHP) is a financing mechanism whereby the asset cost is amortised over its depreciable life. The asset value is included in the company’s assets on the balance sheet, as is the liability associated with the payments. The purchase cost is paid by the financier, avoiding the need to extend bank borrowing. The repayment structure can include a balloon payment, and ownership of the asset is held by you.