Types of Finance Explained
Empowering Businesses with Smarter Machinery Financing
At Gunn JCB, we recognise that staying competitive means having access to the latest equipment. However, purchasing machinery outright isn’t always the most practical financial decision. That’s why JCB Finance offer a diverse range of customised finance solutions designed to meet the unique needs of every business, no matter how complex. Let’s explore some of the most popular financing options available.
JCB FlexiLease
JCB FlexiLease is a bespoke operating lease designed specifically for customers acquiring JCB machinery. It offers the core benefits of a traditional operating lease, such as lower upfront costs, consistent monthly payments, and flexible contract terms – alongside a distinctive financial advantage: profit-sharing at the end of the lease.
Unlike conventional leasing, JCB FlexiLease allows you to benefit from the machine’s resale value. If the equipment sells for more than its projected residual value at the end of the lease, the surplus – essentially the profit, is returned to you. This transforms a typical leasing expense into a potential financial gain.
For businesses that want access to premium JCB equipment without the full cost of ownership, JCB FlexiLease presents a smart and economical solution. It’s especially attractive for companies prioritising flexibility, efficient cash flow, and the opportunity to recoup part of their investment.
Key Benefits:
- Customised lease solution
- Minimal upfront investment
- Fixed monthly payments
- No ownership of the machine
- Retain any profit made on resale
Operating Lease
An Operating Lease is a versatile financing option ideal for businesses that don’t need to own the asset at the end of the term. Instead of purchasing, you pay for the use of the equipment over the lease period, resulting in lower monthly payments.
This structure supports your business’s cash flow and operational needs, with payments tailored to match usage. A major advantage is the low initial capital requirement, helping you preserve funds for other priorities.
VAT is charged on each rental as it becomes due, rather than upfront. If your business is VAT-registered and the asset qualifies for business use (subject to applicable rules), you may be eligible to reclaim some or all of the VAT, adding another layer of financial efficiency.
Operating leases are ideal for businesses that prefer to keep assets off the balance sheet, maintain flexibility, and avoid depreciation risks.
Key Benefits:
- Flexible leasing structure
- Lower monthly payments than Hire Purchase
- Minimal initial investment
- No depreciation risk due to lack of ownership
Hire Purchase
For businesses that require ownership of the equipment at the end of the agreement, Hire Purchase through JCB Finance is a solid option. Two popular variations for JCB machinery are HP Fixed and HP Variable.
HP Fixed
With HP Fixed, payments include both capital and fixed interest, with the interest rate remaining constant throughout the agreement. This offers predictable budgeting and protection against interest rate increases. Agreements typically span 1 to 5 years and apply to purchases over £5,000.
HP Variable
HP Variable also breaks the purchase into monthly payments, but differs in that only the capital is covered in the monthly instalments, while interest is billed separately. The interest rate fluctuates with the base rate and is calculated daily on the outstanding balance. This can be a cost-effective option if the balance is paid off early, as it reduces the total interest paid.
Choosing the Right Hire Purchase Option
Both HP Fixed and HP Variable result in ownership once all payments and a small fee are completed. VAT is typically paid upfront but may be reclaimable. There is a risk of repossession if payments are missed.
- HP Fixed is ideal for businesses seeking stability and predictable monthly costs.
- HP Variable suits businesses that prefer financial flexibility and may benefit from early repayment.
Key Benefits:
- Ownership upon completion of payments
- Fixed: consistent payments with no interest rate risk
- Variable: adaptable payments based on business needs
Ready to Move Forward?
Reach out to the Gunn JCB sales team to explore your financing options. Whether you’re expanding your fleet or upgrading existing machinery, now is the perfect time to discover smarter ways to invest in your business.
Gunn JCB is not a finance or tax advisor. Always seek advice from your account or finance director.