Advantages of Leasing Equipment
- Leasing provides one hundred percent financing.
Down payments are eliminated with leasing. Invest cash to expand inventory, marketing or human resources. Grow the business rather than thwart it with expensive purchases.
- Leasing allows a single payment for multiple vendors’ products.
Consolidate several pieces of equipment from various vendors into one affordable payment, structured to suit your budget and time frame.
- Leasing preserves bank lines of credit.
Loans are most economical for expansion, marketing and growing your business, while leasing is most beneficial for long term equipment needs. Ideally, bank loans and leasing will complement each other.
- Lease payments on business equipment are fully deductible operating expenses.
Deducting costs from pre-tax income reduces tax obligations. In contrast, credits for depreciation are typically claimed over a longer period and substantially lower in a given year than leasing write-off.
- Leasing equipment protects against the risk of technological obsolescence.
The state-of-the-art equipment purchased today may be tomorrow’s dinosaur. Leasing allows an opportunity to evaluate whether the equipment fills the needs.
- Leasing equipment protects operating budgets.
Payment schedules and terms are tailored to suit specific financial needs. Terms can be structured with annual, semi-annual or varied payments for companies with seasonal income.
Installation and other items including maintenance plans may be included in the lease, saving additional costs.
- Leasing protects against fluctuations in the money market.
Variable interest rates can prove costly. Most leases are quoted with fixed rates and level payments throughout the term of the lease.
- Leasing protects against after purchase add-on expenses.
Insurance, maintenance, taxes, installation, shipping and training costs can be incorporated into the lease agreement as well as maintenance cost, saving additional outlays.
- Lease payments appear as a footnote on balance sheets.
Banks generally treat leasing obligations differently. Most bank loans will include a blanket UCC1 encompassing revenue and other assets purchased, including equipment. Using borrowed funds to purchase negatively impacts credit by increasing liabilities.
- Leasing enhances cash flow.
Essential equipment is critical to a business. Enjoy the use of equipment while paying for it. The equipment produces – not its ownership. At the end of the lease, own the equipment, if desired.