Operating Lease

An agreement for a fixed period of time where payments are made in return for the use of equipment. Our Operating Leases can be used by education providers, as well as businesses. Some of the risk in the asset remains with Arkle and therefore the education provider or business incurs finance charges for a proportion of the asset cost.

This product is designed for medium and long life equipment to allow the education centre or business to secure use of the equipment and spread a proportion of the cost over the period it is to be used. The Net Present Value calculation of the sum of the payments must be less than 90% of the equipment price when new.

An Operating Lease does not transfer substantially all of the risks and rewards of ownership to you. An Operating Lease is a lease where the lease terms do not guarantee that Arkle will get back all, or substantially all, of the cost of the equipment plus a commercial rate of interest. In many cases the equipment may be leased several times throughout the course of its life, though this is not always the case.

This means that Operating Leasing leaves Arkle with an equity (or financial) risk. At the end of the term of the lease Arkle will be relying on the value of the leased equipment to ensure Arkle makes a profit.

In some cases, Operating Lease rentals can be thought of as reflecting the market rate for hiring the asset concerned. However, this is not always the case and has nothing to do with the definition of an Operating Lease. Operating Leases are complex in nature and must be considered in detail on a case by case basis.

If when scrutinized the lease shares any of the key features of a Finance Lease, then the lease under review is not an Operating Lease but is a Finance Lease.

 

Operating Lease For Business

Suitable equipment would include but is not limited to:

•             Yellow plant

•             CNC machine tools

•             Cranes

•             Temporary modular buildings

•             Printing presses

•             Audio visual and technology assets

•             LED lighting

•             Semiconductors

•             Printed circuit board equipment

•             Scientific instruments, medial and laboratory equipment

•             Forklifts and materials handling equipment

 

Operating Lease For Education

Schools and Academies have traditionally relied on the NPV rule alone to determine what is and what is not an Operating Lease, whereas the commercial sector also considers all the other features of the lease including obligations placed on customers. This is sometimes referred to as the "substance over form" test and is subjective in nature. One Local Authority might consider a lease to be an Operating Lease and another Local Authority might consider the same lease to be a Finance Lease and reject it.

Schools and academies are increasingly taking into account the substance over form aspect of a lease when determining its type. This can be important because if a proposed lease demonstrates any of the key features of a Finance Lease, it may be viewed not as an Operating Lease but as a Finance Lease instead and consequently its use be prohibited.

How it works

  1. Choose your equipment or vehicle.

  2. Once you’ve signed your agreement with us, you’ll pay
    a fixed number of loan repayments over a fixed period
    of time, including fixed interest charges

  3. At the end of the lease, you can either:
    return the goods with nothing else to pay, as long as
    they meet the Return Conditions, or
    carry on using the goods and pay additional, ‘fair market
    value’ lease rentals

What’s so good about this product?

  • Historically Operating Leases have been "off balance sheet" but check with your accountant. 

  • Choose between one and five year repayment terms.

  • Sign your agreement digitally and say goodbye to print
    and post.

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