| RENTAL | CASH | |
|---|---|---|
| Capital outlay payments | Monthly Quarterly/Bi-annual payments. Rentals can be specifically structured to suit users requirements. | 100% |
| Valued added tax | Payable on each rental. | Payable in full purchase. |
| Keeping up to date with new technology- upgrade by addition | Rental payments increase in relation to the value of the upgrade (software upgrades can be accommodated). | 100% |
| Upgrade by replacement or replacement if peripherals | Rental payments increase in relation to the value of the upgrade (VAT on old equipment is only borme for period used) | VAT on old equipment is not refundable. |
| Shortfall between book value of equipment which has been traded in and value received as trade in | Included rental, can however be taken out by paying a corresponding balloon payment. | Write off. |
| Ownership | Owned by Lessor. | Owned by user. |
| Termination alternatives | Equipment can be retained on an extended rental (rentals on extension can be negotiated at the outlet). | N/A |
| Cancellation of contract | Lessee may cancel by purchasing equipment. | N/A |
| Tax recoupment on termination | Applicable if user obtains ownership on termination. | Tax is payable on the profit of sale of the fixed asset. |
| Taxation | 100% if rentals paid are tax deductible. | Wear and tear allowances claimed by the user. |
| Effect on balance sheet | Not at all. | Asset must be capitalized which reduces liquidity. |
| Exisisting lines of credit | Not utilized. | Not utilized. |
| Interest rates | Not applicable as rentals are negotiated for use and upgrade of equipment. | Nil, but opportunity of investing funds elsewhere or of recalling the funds is foregone. |