Since our move, from 208 Balham High Rd to 109 Balham High Rd, money has been in short supply. When we originally planned the move to our bigger store there was a surplus of banks willing to lend us money cheaply. However, although agreements were in place with the lenders; they pulled out due to the crash leaving us no option but to lease some of our necessary new equipment.
The problem with lease hire it costs almost 3 times as much to service as a normal loan and with no guarantee of getting the ‘go ahead’. There was another problem with lease hire in the fact that the brokers craftily split the finance of the cost of the equipment between a number of lender, fine you might think; what difference does it make who lends the money? Not so! There is a real sting in the tail waiting for you when this happens. I will explain shortly.
When we decided we had no choice but to lease; myself, the accountant and the Agent for the lease company met. We discussed the details and we was assured that there was no balloon payment at the end of the term but a very small payment for the transfer of deeds “approx £200-£300” said the agent. I looked through the small print but no suggestion of the charges to come. Nevertheless, when the charges did come they were astronomical! For one piece of equipment I received 3 charges for transfer of lease totaling around £4000-£5000! The total we ended up paying for lease transfers was in the region of £15,000.00. I could not believe it, thus, we was confined to another year of struggle. Cleverly, the agent split the finance between 3 lenders knowing that they would get a cut of the lease transfer action at the end of the term. I felt swindled and complained but to no avail! We had to pay it! Basically, each lender charged what they wanted! Another warning was that if you didn’t give them 3 months notice that you wanted to transfer the lease they would charge you the monthly charge for another 3 year period! what a scam! Luckily we recognized this and notified all the Lenders. Everyone believes that the banks have had there knuckles wrapped for the PPI swindles, the interest loan scams and the interest rate fixing but they are up to no good in many other ways swindling small businesses of their hard earned cash!
So beware if you are a business and are going down the route of lease hire to help expand your business as the lease agents and lenders see you as an easy target and a cash cow! Beware it’s not always in the small print so get such things in writing from the agents so you don’t get stung like we did! You have been warned!!!