There are numerous advantages to renting – as opposed to buying or leasing – hi-tech equipment.

• A deposit, or no large capital amount is required
• Flexibility of upgrading or downgrading before the contract has expired.
• Finance is easily available as the equipment itself provides part of all of the security required.
• The rental figure per month can be structured to include service and maintenance charges.
• VAT is payable on each rental and is not included in a principal debt amount, to the user does not pay finance charges on this. When upgrading equipment, VAT would have been paid only on rentals up to the time of the upgrade, and not till expiry of original contract.
• 100% of the rental payment is tax deductible (off Balance – Sheet Expense).
• Rented equipment does not have to appear in the users books as an asset of contingent liability. Until agreement is completed, rentals are reflected as monthly expenditure.

NB: Customers often criticize a rental package in that they never retain or own the equipment at the end of the contract.

TAKE NOTE: “The real benefit is not ownership of the equipment, but the use of it in the most cost effective manner in net present value terms after VAT. The disadvantage of ownership is that it is far more difficult to change the equipment for something better”.

In a hi-tech market, where equipment is written off before 5 years, and where the market is changing so rapidly with innovative equipment, who wants to acquire ownership?