Equipment Finance
Cash Purchase V Finance Agreement*
A profitable business looked to purchase a piece of equipment. The business explored the most cost effective and tax efficient method of payment. The following comparison was calculated.
| Cash Purchase |
£6,500.00 |
|
3 Year Finance |
£6,500.00 |
|
|
|
|
|
|
£6,500.00 finance (10% Deposit then 36 x £201.35) |
|
|
|
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Interest lost from using money from bank @ 5%
Year 1 - £325.00 / Year 2 - £341.25 / Year 3 - £358.31 |
|
Interest gained from money in bank @ 5%
Year 1 - £325.00 / Year 2 - £341.24 / Year 3 - £358.31 |
| Total Interest Lost |
£1024.56 |
|
Total Interest gained |
£1,024.56 |
|
|
|
|
|
Writing down allowance @ 25%
Year 1 - £650.00 / Year 2 - £487.50 / Year 3 - £356.63 |
|
Finance Agreement = 100% Tax Deductible
(Total Repayments = £7,898.60) |
|
|
|
Minus Tax Allowances at 40% |
£3,159.44 |
|
|
|
|
|
| Total Tax Allowance |
£1,494.13 |
|
Total Tax Allowance |
£3,159.44 |
|
|
|
|
|
| Total Cost |
£6,500.00 |
|
Total Repayments |
£7,898.60 |
| Minus Tax Allowances |
£1,494.13 |
|
Minus Tax Allowance |
£3,159.44 |
| Plus Lost Interest |
£1,024.56 |
|
Minus Interest Gained on Capital |
£1,024.56 |
|
|
|
|
|
| Total Cost of Paying Cash |
£6,030.43 |
|
Total Cost on Finance Agreement |
£3,714.60 |
|
|
|
|
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WINNER = FINANCE AGREEMENT = SAVING: £2,315.83 |
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| To take advantage of our low rates, call today for an instant quote on 0754 546 4458 |
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*This is an example only. Figures will differ dependent on business situations and different factors
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