Advantages of Leasing
Nearly any capital asset can be acquired through a lease. When leasing, businesses receive multiple benefits that traditional financing simply
can't match:
Leasing provides total financing. Generally no down payments are required, and lessees pay no extraneous tax, delivery, warranty, or other
miscellaneous costs. All costs associated with a purchase can be included in the lease, including delivery and installation.
Leasing conserves working capital. Leasing leaves lines of credit at other financial institutions free for cash-flow purposes, investments,
unsecured loans, or unexpected emergencies.
Leasing overcomes budget limitations. Most companies are hampered by capital budget limitations from time to time. Leasing allows businesses
to acquire new equipment with easily affordable rental payments.
Leasing provides security against equipment obsolescence. Upgrade and trade-in options can easily be added to a lease agreement. In addition,
there are no risks of equipment ownership, and lessees will never be required to resell or remarket obsolete equipment.
Leasing can offer tax savings. When properly structured, monthly lease payments may be fully tax deductible as an operating expense. This
savings results in a lower after-tax equipment cost.
Payments are a fixed cost. Monthly lease payments remain the same for the life of the lease, even if interest rates do not.
Leasing provides a faster return on investment. Revenues or savings created as a result of the equipment during the first month often will
be in excess of the monthly lease payment, thereby providing an immediate return on investment.
It is important to note that the common thread in each of these benefits is flexibility. Lease payments and terms may be structured based on
a businesses particular need. Equipment leasing can be an extremely valuable financial tool for growing businesses while staying competitive
in today's competitive marketplace.
