Lease Your Network

Introduction

Businesses are faced with three choices when buying IT equipment. Do they pay using their own cash, with a loan or should they lease? What are the advantages/disadvantages of each and how Hardware.com can help you to manage your capital expenditure budgets more efficiently?

This document aims to help customers to understand what the potential benefits of leasing networking equipment may be and how they can help you to overcome internal budgetary constraints. Obviously it will not suit every business, but for some it is invaluable and has helped many customers, both large and small, to upgrade their networks and manage their finances more efficiently.

How Can I Afford to Upgrade?

You need a new Network but know it's a lot to pay out in one go.

Paying for IT equipment using valuable cash resources can be a significant drain on your working capital. By paying cash upfront, an either/or choice for essential IT equipment is created. What else could the cash be used for?

Alternatively you could apply for a loan. However, loans are hard to get - they require meetings with the bank, are usually for large expenditures and the administration can be complex.

Now you don't have to worry about finding the lump sum - our leasing facility enables you to make the most of your budget by spreading the cost of the equipment over a period of time. This can make a big difference to your cash flow if you are buying for a whole department or company.

So can leasing really be the answer? How does it work?

What Is Leasing and Can Anyone Apply?

Leasing is a financial contract between your company and a leasing company. You will be committed to repay a given number of fixed payments for the term of the contract, (for example 36 monthly payments of £50+VAT). hardware.com supply the goods to you and are paid by the leasing company i.e. you are effectively renting the goods from the leasing company for the duration of the lease. The goods are owned by the leasing company at all times. Because you are renting and not buying the goods you can claim a tax allowance on the payment.

Lease finance is available to all companies within the European Union, which includes sole traders, partnerships, limited companies, PLC's, national, and local government departments, schools, universities, hospitals & charities*. The minimum price that would qualify for a lease is in the region of £500 + VAT and there is virtually no upper limit. Due to the tax laws that apply to leasing, we are unable to offer this service to customers in Isle of Man, Republic of Ireland or the Channel Isles.

*Educational/public sector special rates: if you are looking for finance for state schools, universities, national and local government departments and hospitals we can offer highly competitive rates or deferred payments. Please call to discuss your requirements.

How Can Leasing Help Me?

No Large Upfront Costs

Most businesses earn revenue over time, but having to pay for equipment up-front, in one go, can tie up one of your most valuable resources; instead keep your money working for you and spread the cost of your IT equipment over its useful working life.

Budget Management

Leasing ensures a fixed manageable monthly payment, irrespective of interest rate rises or other external factors. The low monthly cost of the lease is fixed, enabling accurate budgeting and removing any guesswork from your financial forecasting.

Preserving Credit Lines

We offer leasing from £500 upwards. You can preserve your existing bank lines and optimise your use of commercial credit sources. No additional security required, leasing is entirely separate from any bank lending or other credit arrangements you may have. By leasing equipment, your overdraft or bank loans are free for use in running your business.

Tax benefits, allowable against pre-tax profits

Leasing is fully allowable against tax. All payments are tax efficient. Traditional Hire Purchase is not as tax efficient and therefore may cost more in the long run even if it initially looks cheaper.

Technology Upgrades

Leasing allows you to take advantage of technology advances at a time of your choosing and at a reasonable cost. By contrast, a business that owns IT equipment can only upgrade by reinvesting and disposing of the existing asset.

Flexible Payment Levels

You choose the payment level. Options range from 1 to 5 years. You select the right option so you have the technology you need at a price you are comfortable with.

Conclusion

Leasing is an excellent way to upgrade your network and manage your budget more efficiently - if you do not wish to spend cash or take a loan.

There are no large, upfront fees, it is tax efficient and payment terms are flexible.

Next step

It is very easy to arrange a lease - just call us with your requirements to get an instant quotation on the equipment you need. Please note that the figures quoted may change depending upon the credit rating and status of the applicant. Our Account Management team are available now on 0800 0830 646. We handle all the paperwork and all you have to do is sign the appropriate forms which are sent to you.

FAQs

Please Note: In this guide we use the term "equipment" to denote the assets being financed which may include hardware, software and any ancillary products.

Part 1 - About the agreement

Q: How long should the hire period be?
A: The hire period should be no longer than the expected useful life of the equipment you are hiring. The maximum period we will offer on an agreement is normally determined by the type of products to be hired. As a guide, the maximum period for computers and software is 3 years and telecom products 5 years, although we will consider up to 7 years for some telephone systems.

Q: What happens at the end of the hire period?
A: These agreements are designed to provide flexibility over the life of the contract where benefits are mainly in the use of the equipment. Grenke will retain ownership of the equipment, but you will have the option to extend the period for up to 6 months if required. When the agreement expires you must return the equipment to hardware.com or discuss the option to buy the equipment outright.

Q: How frequently do you require payments?
A: Most people make quarterly payments, but generally you can pay monthly, quarterly, half-yearly or annually. Grenke's standard requirement is for payments to be made in advance by direct debit.

Q: Can I change the payment frequency after the Agreement has been signed?
A: Under some circumstances, it is possible to alter payment frequency, though there would be a fee associated with this request. The new regular rental required would be quoted to you before any change is made.

Q: When are my payments due?
A: Rentals under the minimum period commence on the first of the calendar month or quarter following the delivery of the equipment. Daily rentals are payable for the intervening period between the delivery date and the commencement of the minimum period.

Q: Are the payments fixed for the period of the agreement?
A: The basic rentals are not affected by fluctuations in interest rates. VAT will be charged at the rate applicable at the time rentals are due. If there are any changes in taxation or writing down allowances during the period of the agreement, Grenke may vary the remaining rentals to leave them in the same financial position they had assumed at the beginning. If you have chosen to include payment for Smartpac Support and/or insurance any increase in hardware.com's invoice or in IPT will be added to the rentals.

Q: Can I change my mind after signing the agreement?
A: The duty to consider the contract in full before signing an offer for finance is on you. Once delivery takes place, the early termination rules, as stated in the agreement terms and conditions, apply. There is no cooling off period. You must notify Grenke immediately if you decide not to proceed with the hire agreement before delivery, but that does not affect your obligations to hardware.com under the order you will have placed with them.

Q: Can I end the agreement before the end of the minimum period?
A: Assuming your payments are up to date, you will need to give Grenke three months notice, return the equipment and make a single termination payment as laid down in your Agreement. This will consist of rentals still left to go, minus an early settlement discount. A written quotation can be provided on request. Grenke's calculations are in accordance with industry guidelines.

Q: What proportion of my rentals can I claim against tax?
A: Under hire agreements you can claim the full amount of rental payments against taxable profits in calculating your tax liability for each year.

Q: Are these agreements covered by the Consumer Credit Act?
A: If you are a sole trader or partnership the agreement will be a Regulated Hire Agreement and subject to the provisions of the Act. This does not apply if you are a limited company or other corporate body.

Q: What are next steps to apply for a lease?
A: Fill in the application form and submit it to hardware.com - in most cases we will have a decision within 1 hour. Once the lease has been agreed the contract will be sent out, signed and returned, then hardware.com will dispatch the equipment

Part 2 - About the equipment

Q: Who is responsible for insuring the equipment?
A: As soon as you take delivery of the equipment you are obliged to insure it against loss or damage. You are also liable for third party risks, including loss, damage or injury to persons or property. Grenke may ask you for proof of equipment insurance and if you do not have any, arrange it on your behalf. The premium would then be charged along with your rentals.

Q: What happens if the equipment is stolen or damaged?
A: If the equipment is stolen or damaged you should deal with this through your insurers in the usual way (unless Grenke have arranged equipment insurance on your behalf then we would process your claim). You must tell Grenke as soon as possible if loss or damage occurs. If you make an insurance claim that results in the equipment being replaced, then this new equipment will belong to Grenke.

Q: What do I need to do about guarantees?
A: If you want any warranties or guarantees for the equipment, its maintenance or suitability for its purpose, you must obtain them from hardware.com. Smartpac Support is able to offer maintenance for all equipment sold by hardware.com

Q: What about maintenance of the equipment?
A: You are required under the terms of the agreement to make sure that the equipment is taken proper care of and used in accordance with the manufacturer's instructions. You have the option to include payment for Smartpac Support under the terms of a separate maintenance agreement, which you may take out with Hardware.com, with the regular rentals.

Q Who should I contact if I have a problem with the equipment?
A Grenke can only deal with queries related to your lease agreement. Queries regarding the operation/maintenance of the equipment should be directed to your Hardware.com account manager. Grenke will give reasonable assistance in helping to resolve any dispute but it must be clearly understood that we are not responsible for the choice of equipment.

Q: How do I obtain equipment supplies?
A: Your agreement with Grenke does not include the provision of consumables or other supplies and these must be obtained from Hardware.com.

Part 3 - About changes in circumstances

Q: What happens if I move premises?
A: As the equipment is owned by us, you will need Grenke's agreement to move it. Therefore, you should notify them with the details as soon as possible before the move and they will process the request for transfer to a new site. The equipment may not be moved outside of the UK.

Q: What happens if I sell my business or want to transfer the equipment to someone else?
A: Grenke can affect a transfer by entering into a new agreement for the remaining minimum period, provided the proposed new hirer passes their credit checks. Grenke will charge an administration fee to cover our costs.

Q: Can I change or add equipment before the end of the minimum period?
A: Grenke can usually accommodate changes to the original equipment, subject to credit approval at the time. Contact Hardware.com to discuss your requirements and obtain a quotation of the amended rentals which would apply.

Q: What if I cannot meet the payments?
A: Obviously you will be under an obligation to make payments to Grenke when they are due. If you do not, they will make a late payment charge for each month that you do not make a payment on time.

If you are having problems please contact Grenke as soon as possible and they will see what they can do to help. If you remain in default of your obligations, Grenke will have to take the equipment back (subject to statutory provisions) and you will be liable to pay them compensation.