Why wouldn’t we pay cash, borrow from a bank or use reserve funds?

Cash has an opportunity cost. Leasing allows you to free up your cash to use for operational costs rather than capital expenditure. Up-front purchase and traditional leasing options impact the financial position of a Local Government organisation in different ways. Purchasing equipment often requires outlaying substantial cash reserves that are better invested in direct income-generating opportunities or assets that appreciate over the planned term of use rather than depreciate quickly.

Banks must recover the full cost of the asset acquisition plus the normal lending costs (interest, fees, etc). ISIS LG FINANCE can take a risk on the residual value of the asset at the end of its optimal life cycle which means you don’t have to fund that amount and the associated lending costs attached to the residual value. Banks legally can’t take a residual position in the assets it funds – ISIS LG FINANCE can.

ISIS LG FINANCE also has very solid risk and residual value management systems, volumes of business and asset disposal mechanisms which ensure a better “end of term” outcome than LG could generally ever expect to match.

Traditional financing methodologies place the risk of equipment ownership solely on the borrower. Under an ISIS LG FINANCE financing facility, capital is invested in the risk of ownership during the life cycle and at the expiry of the rental term. As a result, when rental payments are compared to traditional leasing methods, they are usually lower. ISIS LG finance also covers the costs of disposal and carries all the asset obsolescence risk associated with an asset.