Advantages Of Leasing Equipment
Why Companies Lease Equipment?
Companies lease equipment because leasing represents the best use of their financial resources. Businesses which do not lease operate at a competitive disadvantage. They deny themselves the productivity-enhancing effect of better equipment which they could otherwise obtain. They operate with older equipment than they could otherwise afford. Ultimately, they may lose the ability to compete, having higher costs and lower productivity than better managed operations.
Conservation Of Capital:
When capital is conserved by leasing equipment, it can be applied towards other company uses (i.e. increasing inventories, expanding sales, etc.). The average return on capital in business is 18% AFTER taxes.
Conservation Of Credit:
A lease is not a loan. Borrowing reduces lines of credit. Leasing is thus a NEW credit source which allows the customer increased borrowing capacity.
Off Balance Sheet Financing:
An operating lease keeps the debt, and the corresponding asset, off the company’s balance sheet. Therefore, borrowing debt covenants from existing creditors are circumvented, financial ratios are enhanced, borrowing capacity is increased and the company appears healthier financially.
The latest technology is available which helps maintains your competitive edge. Structured leases can allow upgrade and trade-up options to all of our customers.
A True Lease generally allows 100% of the monthly payment to be expensed whereas bank financing would only allow expensing the interest costs (Accelerated Depreciation).
Leasing provides fixed rate financing with specially structured terms to accommodate the specific need of each and every company.