ADVANTAGES OF EQUIPMENT LEASING:
Low monthly payments:
The monthly lease payment will usually be lower than the payment required by other methods of financing.
Preserve your cash flow:
Businesses need to preserve their capital to fund growth, expansion, and operations.
Growing businesses need cash to expand and purchase new equipment. Established businesses need cash for operating capital, expansion opportunities, and replacement of old and/or obsolete equipment. With new equipment leasing, your upfront costs are minimal. You get the equipment you need and comfortably spread your payments out over time.
Preserve existing lines of credit:
Business or Commercial Equipment Leasing has no impact on your bank credit lines. Protect your borrowing power for short-term capital needs for operations and opportunities.
Technology is always advancing. Equipment you purchase today may be obsolete three years from now. New equipment leasing allows you the flexibility to maintain a competitive edge by giving you today’s best technology and allowing you to upgrade when the equipment has outlived its advantage.
Fixed payments through the term of the lease:
Unlike bank lines of credit that usually have variable rates, lease payments are fixed. In the 1980’s rates rose from 9% to over 20% in one year causing severe hardship for many businesses. In 2008 and 2009 the financial markets were in turmoil and are still not completely stable. By choosing to lease, you protect yourself from market fluctuations outside of your control.
Significant tax and accounting advantages (Consult your financial advisor!):
Prudent businesses take advantage of allowable tax deductions for equipment as set out in section 179 of the US tax code. Lease payments are generally reported as line item expenses on your P&L statement instead of being depreciated over long terms. And since lease payments can usually be treated as a pre-tax business expense, you may be able to reduce your taxes. Paying cash for equipment automatically adds 30-40% to the cost when you realize that cash = profits and taxes are paid on profits.
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