Rentals

Product Comparison

 Rental

Financial Lease

Cash

May Escalate instalments to suite client.

Structured payments.

Capital outlay upfront reduces working capital.

VAT payable monthly and is regarded as Input Vat and written off against any output Vat collected.

The full VAT portion is claimed from SARS upfront.

The full VAT portion is claimed from SARS upfront

Interest calculated on cash price before VAT.

Interest is calculated on the cash price including VAT.

No interest payable

The full rental is 100% tax deductible monthly.

Depreciation is the only benefit that reduces the income tax payable. You cannot write off the payments as a tax deduction

Depreciation is the only benefit that reduces the income tax payable.

No Capex approval required.

Capex approval required for purchase of equipment.

Capex approval required for purchase of equipment.

Off-Balance Sheet. Operating expense in the income statement. No claiming of wear-and-tear allowances (depreciation).

Appears on the client’s financials as an asset. Client claims wear-and-tear allowances (depreciation) according to SARS tax tables.

Appears on the clients financials as an asset and the relevant depreciation must be provided for.

Interest rate not disclosed.

Interest rate not disclosed but is available on request

N/A

No deposit is necessary.

Deposits are negotiable.

Capital outlay upfront.

Does not affect ‘equity ratio’, ‘current ratio’ and ‘return on assets ratio’ on financial ratio analysis.

Affects ‘equity ratio’, ‘current ratio’ and ‘return on assets ratio’ on financial ratio analysis.

Affects ‘equity ratio’, ‘current ratio’ and ‘return on assets ratio’ on financial ratio analysis.

Option to upgrade equipment is available

Existing deal must be settled prior to upgrade

N/A