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Leasing or hire purchase: What options work for stainless steel tanks?
A hire purchase or leasing contract can be an interesting liquidity-saving alternative to the conventional procurement of used or brand-new stainless steel tanks. In such a scenario, the tank or processing equipment is not acquired and paid for by the customer directly, but is provided to the customer via a lessor / hire-purchase agent ("financing partner").
What are the differences between a hire purchase and leasing? (according to German accounting standards)
With a classic leasing model, the lessor leaves the tank or process machinery to the customer for a fixed monthly amount, which is billed including the applicable VAT. The financing partner is both legal and beneficial owner. This means that the equipment is not recorded and written off in the balance sheet of the customer. The leasing rate is simply covered within the ongoing operating costs of the customer. At the end of the leasing contract, an option to aquire the equipment piece is usually offered to the customer.
In contrast, in the case of a hire purchase, the financing partner is only the legal owner, whereas the customer is the beneficial owner. The tank / apparatus is therefore recorded in the customer's balance sheet and written off. This also means that the VAT on the purchase must be paid in full by the customer before the start of the rental purchase contract. The monthly installments of the hire purchase are accordingly net installments, since the VAT has already been paid in advance. After the lease-purchase contract expires, the customer automatically becomes the legal owner of the production machine.
What options work for brand new or used tanks & process machinery?
Conventionally, leasing contracts can only be used for brand-new tanks & amp; production machines. This is due to the fact that leasing companies orientate themselves strongly to the legally stipulated depreciation period of the respective useful object. In the case of used stainless steel tanks or processing machines, however, it often happens that the they are already 20-30 years old. The useful life from a tax point of view has already expired. However, since stainless steel is hardly subject to aging, the actual lifetime of the machine can still be very long.
For used tanks & machines, the hire-purchase model is therefore the best choice. It can be implemented easily and works very similar to a corporate loan.
If you are interested in a hire-purchase or leasing offer for brand-new or used stainless steel tank and production machine from our stock, we look forward to hearing from you. We cooperate with several financing partners that can certainly provide you with an attractive offer!