Equipment Leasing in 3 Easy Steps
Lease to Own
Advantages of Equipment Leasing
Business and industries often use leasing as a tool for acquiring needed equipment or furnishing. It is a popular means of getting the things you need to run your business without having to pay a large sum of money at once. That means you'll be able to invest more money in other ventures.
Some advantages of lease financing are:
- Conservation of Capital:
Cash remains untouched and available for other profitable purposes.
- Tax Savings and Improved Cash Flow:
The full cost of leasing can often be treated as an expense deduction for income tax purposes and may result in a larger tax deduction than if you were claiming a depreciation expense. This can mean substantial tax savings and improved cash flow.
- Better Terms:
Lease payments usually can be extended at fixed rates over a longer period of time than conventional bank financing and without large downpayments.
- Easier Allocation of Cost:
Costs of individual equipment or systems can be better analyzed, controlled and reduced because of direct allocation. No hidden costs.
- Leaves Bank Lines Untouched:
Normally, a lender will not reduce a line of credit when equipment is leased. However, when the equipment is financed, it consumes available credit.
- Cleaner Balance Sheet:
Lease payments may be entered as footnote items on a balance sheet and may not increase your liabilities as a loan does. This is important to obtain additional credit.