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Lease
vs. Purchase vs. Loan
Many
companies know they need equipment, but are unsure which is the best way
to acquire it, whether by purchasing it outright, using a line from their
bank, or leasing. It can be a tough decision for a business owner to make.
A wrong choice can have serious consequences on any business.
| Why
Lease?? |
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Leasing
pays for itself. Your profits come from the use of the equipment,
not the ownership of it. When you lease a computer, it earns its
worth because you pay for it as you use it. Would you pay your
office staff their salaries three years in advance? By leasing
your computers with monthly payments, you don't have to pay for
the whole thing up front. You can keep that cash free to invest in
appreciating profit-making assets. Your new equipment makes money
while your liquid capital is retained. That's effective cost
management. |
| Total
Flexibility |
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Leasing can cover
most soft costs which aren't included in other methods of
financing such as installation, freight and contracts. |
| Cost
Control |
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Easy to budget
monthly payments. Interest rate fluctuations will not impact
monthly payments, rental is fixed, predictable and budgeted. |
| Credit
Line Maintenance |
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Borrowing
capabilities with your banks are not impacted. A lease is an
off-balance sheet transaction and is not considered a loan.
Therefore, it does not reduce your lines of credit. It also
improves return on assets, liquidity, solvency, and other key
financial ratios. |
| End
of Lease Options |
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You have choices
that ownership does not provide. You can purchase the equipment at
the fair market value, return the equipment, or upgrade the
equipment to the latest generation. |
| Tax
Advantages |
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Lease rentals are a
business operating expense. You can realize total expense
deductibility rather than just depreciation, as in an installment
loan. |
| Obsolescence
Avoidance |
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Lease terms can
minimize your company's time commitment, making it easier to take
advantage of emerging technology. CapitalWerks, LLC assumes the
risk of obsolescence, not you. Leasing provides a low cost,
flexible method of providing your most valuable asset … your
employees…with the most productive tools available, thereby
realizing a greater return on your investment in your employee. |
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Did
you know? |
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Lease
Tip |
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