- Leasing Conserves Capital
- Growing, competitive companies need all the capital they can generate. With leasing, cash is not tied up in equipment equity. With no sizable down payment and small fixed monthly lease payments, leasing frees the capital businesses need to compete in today’s markets.
- Convenience
- This is the number one reason customers lease equipment. It is usually offered by the equipment supplier so they do not have to arrange financing with a bank or convince a capital budget committee to spend the cash.
- Expand Your Budget
- If your budget doesn’t provide for a substantial capital outlay, leasing’s affordable monthly payments can mean the difference between obtaining the equipment and productivity improvements now… or waiting for next year’s budget.
- Transfer Ownership Risk / Obsolescence are Obsolete
- Acquire the usage of equipment while the Lessor assumes the risks and uncertainties of ownership, especially with rapidly changing technology. If equipment trends or your business needs reduce the function or value of the equipment, it’s the Lessor - not the customer - who takes the risk.
- Upgrade Flexibility
- Cash purchases, or bank financing, lock you in while leasing enables you to upgrade during the lease term.
- Additional Source of Credit
- Existing bank credit lines remain available for short-term needs, such as inventory peaks, trade discounts, rising operating costs, and unplanned expenses. Since leasing may not increase your debt, you may be able to increase your borrowing capacity.
- Leasing Includes Cost of Acquisition
- Your lease payments can also include the costs of delivery, installation, and other service charges.
- Hedge Against Inflation
- Tomorrow’s dollar may not have today’s purchasing power. It makes sense to use tomorrow’s cheaper dollars to pay for today’s new equipment.
- Payment Amount is Fixed
- Payments remain constant, which can simplify budget projections. Bank loan payments may increase as interest rates rise.
- Matches Benefits and Costs
- By paying for the usage of the equipment, customers match the timing of the cash outlays with the benefits of usage.
- End of Term Flexibility
- Leasing gives the options of returning the equipment to the Lessor, lease new equipment, continue leasing the equipment, or purchase the equipment.
Tax Advantages – You may be able to take advantage of tax breaks utilizing Section 179 of the Internal Revenue Code. This tax rule allows you to deduct a certain dollar amount each year from qualified equipment purchases.
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