Returning leased equipment

[rich998]

Hi all.

I'm in the position where I'm going to have to either downsize the business, or close it completely. We've financed some of the equipment via Kennets and Lombard and these leases were taken out over 5 years and there is 1 year and 10 months remaining on them.

In laymen's terms, what would the position be if I no longer needed the equipment leased?

 

[StevensOnln1]

Did you give a personal guarantee when you took the lease?

 

[rich998]

Yes. From what I remember.

 

[elaine@cheapaccounting]

Have you got the lease agreement to hand - that will give details of early redemption

 

[David Griffiths]

The basic position is that you have to pay for the full term of the lease, and return the equipment at the end of it.

If you return it early, the lease company will probably try to sell it, and apply a percentage of the proceeds (often 95%) against the balance of rentals due. They will then come after you for any shortfall. If you are trading through a limited company and you've given a personal guarantee then they will seek payment from you. If that's the case, they probably won't be too bothered about getting full value for it, so you might be better off arranging for a sale yourself.

If this is a vehicle they may charge you (quite a lot) if the condition doesn't meet their specifications, and still want you to pay the balance of the rentals.

 

[businessfunding]

The basic position is that you have to pay for the full term of the lease, and return the equipment at the end of it.

If you return it early, the lease company will probably try to sell it, and apply a percentage of the proceeds (often 95%) against the balance of rentals due. They will then come after you for any shortfall. If you are trading through a limited company and you've given a personal guarantee then they will seek payment from you. If that's the case, they probably won't be too bothered about getting full value for it, so you might be better off arranging for a sale yourself.

If this is a vehicle they may charge you (quite a lot) if the condition doesn't meet their specifications, and still want you to pay the balance of the rentals.

They will probably give you a discount (approx 5%) on rentals due, but then they entitled to charge you for costs relating to sale.

If you are familiar with the market for this equipment you will probably be better to sell it on their behalf (with their knowledge!) and reach a settlement for the shortfall.

 

[rich998]

Thanks everyone. Will keep you posted with how I get on.