John Deere Credit
John Deere has built its reputation on understanding the needs and requirements of land based industries - John Deere Credit in the U.K. is no exception to this rule.
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Godfreys (Sevenoaks) Ltd., through John Deere Credit Ltd can offer attractive alternatives to cash outlay for machinery purchases. Use of financing can match payment to business income, thereby providing an alternative to locking up cash, which may restrict additional opportunities within the business. Finance options fall into three broad categories, Operating Lease, Finance Lease, Hire Purchase
OPERATING LEASE
Structure - The manufacturer/dealer sets a future value for the machine based on its expected resale value at the end of the contract. At the end of the agreement the machine is simply returned to them (subject to specific return conditions). The payments are usually lower than for purchase arrangements as they are calculated on a percentage of the machine cost. An operating lease is ‘off balance sheet funding’; the rentals are simply charged to the profit and loss account as operating costs. Title (legal ownership) will not pass to the lessee (hirer) at the end of the contract. If required maintenance can also be included.
Benefits
· Fixed lower operating costs
· Off balance sheet borrowing
· Hire only, no risk of depreciation or disposal concerns
FINANCE LEASE
Structure – The balance financed is repaid by regular rentals to JDC with a secondary annual rental paid at the end of the primary period. At the end of the term you can sell the machine on behalf of JDC and take the proceeds as a rebate of rentals. Lease repayments are vatable and generally fully tax allowable. Since the 1994 Vat regulations for members sports clubs finance lease has tended to be the favoured option for members golf clubs.
Benefits
· VAT paid on each rental
· Rental offset against Tax
· Simple finance structure
HIRE PURCHASE Structure - The balance to be financed is repaid by regular instalments, at the end of the payment period ownership passes to the club. All Vat is paid on signing. The asset is capitalised and the instalments shown as a liability. Depreciation and the interest element are assigned to the profit and loss account.
Benefits
· Ownership
· Appears as a balance sheet asset
· On resale you receive the proceeds
· Simple finance structure We will be happy to arrange for our John Deere Credit to discuss the various finance options available to you, the commercial user.
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