Types of JCB Finance Explained
We understand that businesses need access to the latest machinery in order to thrive in a competitive environment. Buying this outright isn’t the right financial move for everyone, so that’s why JCB Finance offer a wide range of tailored solutions to suit every businesses’ needs, however complex. Join us as we dig deeper into some of the most popular finance types on offer.
JCB FlexiLease
JCB FlexiLease is a tailored operating lease solution specifically created for customers acquiring JCB machinery. It combines the core advantages of a traditional operating lease, such as reduced upfront investment, predictable monthly payments, and flexible contract durations – with a unique financial benefit: profit-sharing at the end of the lease term.
Unlike standard leasing arrangements, JCB FlexiLease allows you to benefit from any resale value the machine retains once the lease ends. If the equipment is sold for more than its estimated residual value, the extra, essentially the profit, is returned to you. This feature introduces a potential investment opportunity, turning what is typically a cost-only arrangement into a potentially rewarding financial strategy.
For businesses seeking access to high-quality JCB equipment without the burden of full ownership costs, JCB FlexiLease offers a smart, cost-effective alternative. It’s particularly appealing for companies that value flexibility, cash flow efficiency, and the chance to recover part of their investment at the end of the lease.
- Tailored lease solution
- Reduced upfront investment
- Predictable monthly payments
- You will never own the machine
- Any profit accumulated on the machine is yours to keep
Operating Lease
An Operating Lease is a flexible financing option ideal for businesses that don’t require ownership of the asset at the end of the agreement. Instead of committing to a full purchase, you benefit from lower monthly rentals, as you’re only paying for the asset’s use over the lease term – not its full value.
Payments are structured to align with your business’s cash flow and the expected usage of the equipment, offering a tailored solution that supports operational efficiency. One of the key advantages is the low initial capital outlay, helping to preserve working capital for other business needs.
VAT is applied to each rental payment as it becomes due, rather than upfront. If the leased asset qualifies for business use and your company is VAT-registered (subject to specific rules), you may be able to reclaim some or all of the VAT on those payments – providing an additional financial benefit.
Operating leases are particularly well-suited for businesses that prefer to keep assets off their balance sheet, maintain flexibility, and avoid the risks associated with asset depreciation or resale.
- Flexible finance lease option
- Lower monthly rentals compared to Hire Purchase
- Low initial capital outlay
- Avoid risk of depreciation as you will never own the machine
Hire Purchase
If owning the machine at the end of the agreement is a necessity, there is also the option to buy through Hire Purchase via JCB Finance. Two of the most popular variations of Hire Purchase for JCB machinery are HP Fixed and HP Variable.
HP Fixed
HP Fixed involves regular payments, which includes both capital and fixed interest. The interest rate stays the same throughout the entire duration of the agreement. This could be beneficial to businesses looking for an easier budgeting solution and protection from interest rate rises. These agreements typically have a term of between 1 and 5 years, and can be applied on purchases over £5,000.
HP Variable
Whilst similar to HP Fixed in the way it breaks down the purchase into monthly payments, HP Variable differs in few ways. Most notably, the monthly payments in this type of finance agreement only cover the capital, with the interest billed separately. The interest rate varies with the base rate, with the interest calculated daily on the outstanding balance. This agreement can be a cost-effective idea if the balance is settled early, as more interest will be saved on the purchase.
Which Hire Purchase is Best for my Business?
Both of these agreements have similarities in that ownership of the machine is transferred after all payments are made and a small fee, there is a risk of repossession if payments are missed, and that VAT is usually paid upfront but can sometimes be reclaimed. However, HP Fixed is good for those businesses looking for stability and predicability in their finance agreements, while HP Variable is ideal for businesses searching for flexibility in their finances.
- You will own the machine once all repayments have been made
- Fixed offers steady and regular monthly payments, with no risk of interest rates rising
- Variable offers flexible monthly payments, so you can pay off different amounts each month depending on business needs
Ready to Take the Next Step?
Contact a member of the TC Harrison JCB sales department who will happily outline your different options when it comes to purchasing your new machine. Whether you’re looking to expand your fleet, or upgrade your existing equipment, there’s never been a better time to explore smarter financing options.
T.C. Harrison JCB is not a finance or tax advisor. Always seek advice from your account or finance director.