Once seen as a last-ditch financial resort, sale and leaseback has reinvented its reputation thanks
to its success in the vehicular market. Now it is seen as a fast-track method of releasing capital
into your business and providing all the benefits of contract hire to your existing fleet.
This guide to sale and leaseback will explain how the process works and who sale and leaseback is
right for.
What is sale and leaseback?
If your business is in need of an injection of capital,
then sale and leaseback could be a saving grace, providing you are already in ownership of a fleet of vehicles.
The process sees you agree a realistic market value with the leasing company.
You then sell the vehicles to them, who take ownership and then leases the fleet back to you.
This provides your company with an immediate cash injection and allows you to reap the benefits
of a traditional contract hire deal. With sale and leaseback, further depreciation is no longer
a concern.
So what do you need to do to put a sale and leaseback deal into action?
The first step is to bring together all of the essential information about your fleet
– such as mileage, registration dates, exact model and general condition.
You’ll also need to produce the vehicle’s V5 document.
This is the most time-consuming part of the process.
From there, we will come up with a valuation of your fleet –
usually based on industry guides such as CAP or Glasses Guide.
We will then make an offer for your fleet, and also offer you terms for a contract hire agreement
based on mileage, duration of the term and the estimated future value of the vehicle.
As with a traditional contract hire deal, you pay the difference between the current
value and the future (residual) value in monthly instalments.
Once an agreement is reached, we will write you a cheque and take hold of the V5s of the vehicles.
You then start to make your monthly payments and your sale and leaseback deal is under way.
What are the benefits of sale and leaseback?
There are many incentives that encourage companies
to consider sale and leaseback deals, including:
- Immediate cash injection – The sale of the fleet allows you to put money into other projects
- Seller remains in day-to-day control of the vehicles sold
- Improvement of balance sheet through the sale of fixed assets
- Further depreciation and re-sale concerns removed – you no longer have to worry about the future of your fleet or its disposal
- Simpler budgeting – a contract hire deal will allow you to deal with fixed monthly payments and
it is possible to take out maintenance packages so your only concern is fuel and insurance for the vehicles
- New for old – Through sale and leaseback you can establish a contract hire deal which allows you to replace the
- Take full advantage of the recent HMRC changes in relation to capital allowances
for business leases taken out after 05 Apr 2009
Who is sale and leaseback right for?
Any company that requires an immediate cash injection may consider sale and leaseback as a
strong alternative to taking out further loans or plunging into debt. Furthermore, it removes the
day to day risks and difficulties of fleet management and allows your company to reap the rewards
of traditional contract hire – such as the ability to replace old vehicles with new models at the
end of the term. To staff and customers little appears to have changed but to the company.
Next Step
If you think that sale and leaseback could be right for your company please get in contact
with our Sale & Leaseback specialists at Vantage Leasing Solutions on
0844 736 1575 or email: info@vantage-leasing.com
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