How does the flexibility work?Lets’ assume you have leased computers worth £10,000 on a three year lease, costing, say £1000 on each of the twelve quarterly payments.
The change percentageEach rental agreement will have a percentage printed on it. It will tell you what change percentage you qualify for at any stage during your agreement.
After 18 months (6 quarters) have elapsed, you can implement the change option, and choose to reduce your rentals by 40% (to £600 per quarter), thus freeing up budget with which to acquire additional equipment. In this example you have generated a significant “new spend” equivalent to £400 per quarter, or looking at it another way, approx £4000 of new equipment without increasing the payments. The lease then restarts for a new three-year period.
Adding new equipmentYou may wish to preserve your “Free Spend” percentages for a major acquisition, yet use the existing lease, so you may choose to add new equipment to the lease, and the payments will end on a co-terminous basis.
The powerful tool
- You could simply reduce your payments in the event of constraints (subject to credit)
- You can plan for equipment upgrades within a wide timeframe
- You can budget precisely
- You can weigh income streams (or savings) from new equipment more