According to the US Department of Commerce,
80% of companies across the United States
lease part of their equipment inventory.
The leasing advantages that benefit YOUR company:
- Preserve cash flow
- Protect yourself from technical obsolescence
- Leasing covers a full range of commercial equipment - new and used; industrial, mechanical, titled, etc.
- 100% of the financing is covered including maintenance/service contracts, freight, installation, software, training and other related fees.
- No sizable down payments. Only your first and last payment is required in advance.
- Leasing can provide the lowest payment method when your in need of new equipment.
- No additional collateral required.
- Lease multiple pieces of equipment from multiple vendors and still have only one payment.
- Structured payments, (seasonal, quarterly, step, etc.,) are available to make payments easier on your business.
- Tax advantages of leasing are beneficial to your bottom line. Ask your financial advisor for more information.
Options in choosing a lease:
- Type of equipment
- Exercising a purchase option at the end of your lease or a buy-out
- Length of the lease in months
- Leases can be customized to your type of business and its needs
Should you or shouldn’t you?
You shouldn’t lease if you won’t benefit from the use of the equipment.
For instance, you wouldn’t rent an office for $10,000 per month if you estimate your monthly income to be $5,000. Same goes for a lease. You shouldn’t agree to a lease payment of $450.00 per month if the income brought in by that equipment won’t be greater than the output of cash.
Earn income while using someone else’s money:
Equipment cost = $ 20,000.00
This would be your out-of-pocket expense if you purchased this piece of equipment today. So, today you leave the vendor with a new piece of equipment, but your bank account is $20,000 lighter..
Leasing allows you to leave your vendor with the same piece of equipment without touching your bank account. You do get a monthly
payment, but here is how you profit from the equipment
Gross profit resulting from the use of the equipment $1,000.00
Monthly lease payment 450.00
Net profit from the use of the equipment $ 550.00
The example shows that you can be $550.00 ahead and own the equipment at the end of the term. As long as you are bringing in more
than you are putting out you are ahead.