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What Finance Options Are Available?

Funding is available to help you acquire equipment for schools and businesses* from Office King:

  • Operating Lease.
  • Finance Lease.

What is an Operating Lease?
An Operating Lease requires the lessee (school or business) to pay only a proportion of the capital value of the equipment and usually over a shorter agreement term, classed usually as the equipment’s ‘prime life’.

Operating leases have a built-in residual value of the equipment and so this enables rentals to be discounted. At the end of the finance term, the lessee (school or business) can choose to either return the equipment or continue with the rental agreement.

An Operating Lease is also the only form of lease which a Local Authority controlled school/academy can currently sign.

What is an Finance Lease?
A Finance or Capital Lease is a type of commercial lease.

The finance company or lessor is the legal owner of the asset yet will permit the lessee (business) to have use of that asset during the lease, paid for via a series of rentals or installments over an agreed term.

The lessee has the option to continue using the asset by either paying further rentals.

Under a finance lease, the lessee repays rentals over the term of the lease but the rentals are not discounted and during the lease term the user pays for the whole life of the equipment or asset. As all of the capital and interest is repaid under a finance lease, it is constituted as borrowing and therefore is not permitted as a method of funding for State funded schools. Office King can also arrange Hire Purchase (a form of loan) for businesses*

Leasing for schools – it’s an Education!

Leasing for the can be a confusing subject for school business managers, bursars and head teachers, so we try to be clear in what we offer and answer any questions directly and in a straightforward way. As part of our own CSR we endeavour to work within the guidelines for the National Association of School Business Managers (NASBM).

Office King only works with banks and leasing companies which are well established and as such able to arrange leasing for almost any equipment requirement your school may have. This includes:

  • Large Multi Function Printers
  • Printers
  • iDesks
  • Projectors
  • Smart Boards

To help you we have outlined a few points to look for when considering lease as a way to acquire your next capital equipment for your school, whatever it may be:

Operating lease is the only type of lease that schools funded by the local authority can utilise.

No other lease such as finance lease (lease rental) or a hire purchase may be entered into by a school as this is a form of borrowing.



An operating lease has several features which differentiate it from other forms of funding:

  1. On an operating lease you will only fund a percentage of the total cost of the equipment over the initial term of the agreement, as there will be a built-in Residual Value (RV).
  2. The bank or finance company documentation (operating lease) may not state the value of this RV, however, you may ask what it is at the outset.
  3. The period of the operating lease should not exceed the expected useful life of the equipment involved (typical equipment used/chosen would qualify at 3 to 4 years). If you are offered longer by a competitor, then you should consider the expected whole life of the asset and then choose a lease for a term which represents a proportion of this.
  4. Ownership of the asset should remain with the leasing company and there should be no option for the school to gain ownership of the asset at the end of the agreement.
  5. Do not use leasing (of any type) if you are unable to return the equipment at the end of the contract. The documentation (operating lease) should include ‘Return Conditions’ which details how the equipment should be returned.

General Tips about leasing for schools
(and businesses)

  1. If the document is entitled a Hire or Rental agreement - it may be a finance lease unless you are paying substantially less than the Recommended Retail Price of the equipment (Discounted with a present value calculation).
  2. NEVER sign an agreement that is not completed in full.
  3. Make sure that the costs are broken down and that you are aware of your obligations for monthly/quarterly payments under the WHOLE value of the contract: e.g. What do all the payments over the lease term add up to? Do you need to consider potential extension rental costs?
  4. ALWAYS take a copy of any agreement you sign at the time of signing.
  5. BE AWARE of any outstanding balances owed on current leased equipment to ensure you are not taking out another lease on replacement equipment and adding the balance outstanding and ultimately paying compounded interest. This is called an EVERGREEN agreement or a ROLL OVER LEASE and should BE AVOIDED. (Office King do not do this.)  


Futher Reading

 NASBM Schools Leasing Tips PDF
 Schools Conned PDF
What To Do Next!
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