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Why Rent?

Renting your equipment can be helpful.

Buy what appreciates, and rent what depreciates is a good business strategy as a piece of equipment is more important to the production of income than ownership of that equipment.

Off-balance sheet financing
Rentals are accounted for on the Income Statement and are a Non-Balance Sheet item; therefore, will not affect the return on capital employed ratio.
Affordability to users
Longer periods, no deposits, and your choice of annual escalations result in a lower entry-level and allow the user to pay future rentals with inflated rand.
Obsolescence hedge
By its very nature technology becomes outdated within a short period. Replacement models are developed and with a rental, the user may upgrade equipment at any time during the currency of the agreement.
Convenience to the user
Due to the off-balance sheet nature of the transaction, rentals require less accounting.
Diversification of financing sources
Rental facilities offer the end user a new source of finance, not limiting traditional facilities, due to the off-balance sheet nature of the financing of the rental.
Conservation of working capital
As no deposit is required; rental offers a low cost of entry, reducing the burden on working capital.
After-tax present value of costs
With relatively high levels of inflation, finance structures that defer costs; will result in reduced present value cost, after inflation cost accounting.
The restraints of the Usury Act do not affect rental agreements; with payment structures and terms only limited by the economic lifespan of the equipment and the end users’ budgetary constraints. In addition, there is upgrade flexibility by addition or replacement of equipment in keeping with the availability of new technology.
Tax deductible
Rental payments are fully deductible for tax purposes.