Benefits of Rental

Advantages of Rental vs Cash



May escalate/de-escalate instalments to suite client Capital outlay upfront reduces working capital
V.A.T. payable monthly V.A.T. payable upfront
Interest calculated on cash price before V.A.T. Interest lost over period as cash paid upfront that could have enjoyed an interest return of its own.
100% tax deductible monthly Deductible by depreciation via balance sheets annually.
Operating expense in the income statement. Appears in the financials as an asset.
No capex approval required Capex approval required for purchase of equipment.
Not governed by budgets Governed by the company budget
No deposit is necessary Capital outlay upfront
Improves ‘equity ratio’ ‘current ratio’ and ‘return on assets ratio’ on financial ratio analysis. Has to be capitalised
Software, installation, and control cards can be included in the rental. N/A
The option to upgrade equipment is available free of additional V.A.T. on original equipment and if the same supplier is used for new equipment, a preferential discounted figure is given – effectively this is a higher “trade-in” amount. Extraordinarily little to no value is attached to trade-in or 2nd hand equipment after a period of +/- 3 years and therefore capital would effectively be lost when new equipment is purchased. No return on capital would be recognised.

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10 Suni Avenue
Corporate Park South
Nyala Street - Off Old Pretoria Road
Randjespark, Midrand
Gauteng. South Africa

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Halfway House
Midrand, Johannesburg. 1685
South Africa

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