Floatation Tank Lease – Buy outright, loan or lease? Which is best for setting up a Float Centre?
PLEASE NOTE THAT THE INFORMATION BELOW CAN VARY FROM COUNTRY TO COUNTRY
So this is a big question and very much depends on your overall finances. If you have enough to buy your Float Rooms outright and still have enough for all the other start-up costs this may be good for you. Even if you do though leasing can be beneficial in terms of cash flow and tax relief. Another good thing about a floatation tank lease is that you can usually decide on the size of the deposit.
Many of our float room customers have their own finance, or borrow from a bank, or similar institution. However, a good percentage of business customers lease.
There are two types of leasing. Lease purchase and lease rental.
What is the difference between lease rental and lease purchase?
Lease Rental
- Your Payments are 100% tax-deductible
- The lessor claims the capital allowances, not the customer
- VAT is payable on each rental and your business reclaims it in the usual way
- Some leases are structured so that there is a very small payment (typically £100/ £200 or $150- $300) to pay at the end to own it).
Lease Purchase
- All the VAT is paid in advance
- The customer claims capital allowances as per cash purchase
- At the end of the period, the assets automatically become the property of your business
- Payments are NOT 100% ALLOWABLE
What are the Advantages of Leasing?
The key benefits of leasing are :
- 100% tax allowable
Lease rentals are 100% tax allowable which means they can be set against company profit. This makes lease rental the most tax efficient method of financing many projects, and it can work out even cheaper than paying cash!
- Fixed payments for accurate budgeting and forecasting
Unlike any other method of finance such as a bank loan, lease payments are fixed for the payment period allowing you to budget effectively with no unexpected surprises such as interest rate or inflation increases
- Preserve borrowing power
Leasing means you preserve your existing bank credit lines, without compromising future working capital.
- Overcome budget limitations
By spreading the cost over 3, 4 or 5 years you can acquire the solution that fully meets your needs now, and not being restricted by your current capital budget. You can pay monthly, quarterly or annually to suit your business requirements
- Ease cash flow
In most cases you can arrange a lease facility with no deposit thus having little impact on your cash flow.
How much does leasing a float room cost per month?
The monthly cost varies according to
- The leasing company’s rates
- Your personal or your company’s credit rating.
- The size of the deposit. Some people want to lease the entire amount and some pay a deposit and lease the balance. Naturally the larger the deposit the smaller the monthly payment amount.
- The length of the lease. Leasing can be over 2, 3, 4 or 5 years and at the end of the period you often own the float room outright.
What Criteria does a Leasing Company look for to give a Floatation Tank Lease?
1) You own a property, or have a property owner as a guarantor. In neither of these cases is the property secured against the lease; the lease company just likes to see that you or the guarantor, are stable.
OR
2) You have run a business for 3 consecutive years.
On the other hand, some customers have still secured a lease without meeting either of these since other personal criteria are always considered.
Who Provides A Floatation Tank Lease?
In the UK, Ocean Float Rooms know advisers in several leasing companies that offer leases on float rooms, but it is up to the lease company as to whether a lease is given: we refer clients to companies that we have known for years and we know give good customer service to our clients. We are not directly involved in the financial side and do not have a direct financial benefit from a lease that is granted.
This leads naturally to
What about overseas clients that are not based in the UK?
All countries have leasing companies. We have agents in many countries so if there is an Ocean Float Room agent in your country they may be able to help you. It is though up to the client to contact leasing companies and put forward their case.
Float Tank Lease Payment Defaults:
If a customer defaults on a payment, but the customer is showing good will, communicating with the lease company and looking for solutions, it is within their interest of the lease company to work to sustain the lease.
Where the issues can’t be resolved, in the UK the lease company may contact Ocean Float Rooms and seek a valuation of the float room to protect their investment.
Ocean Float Rooms pride ourselves with our customer service and whether you are buying direct from us or from one of our many agents wherever in the world you will get all the advice and support you need to plan the perfect float tank centre.
