About Equipment Leasing

Introduction:

This page was put together to give an overview and provide straightforward answers to the most frequently asked questions about equipment leasing.

Equipment leasing is one of the simplest, most popular, most practical, and yet most misunderstood methods of acquiring and using the modern, up to date tools your business needs to stay competitive and productive.

To get the most from this document, use the menu at the bottom of this page and go directly to the topics you're most interested in or read the document through in order to get a good overall view.

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Equipment Leasing

Equipment Leasing and Equipment Financing programs help cash flow and make superior equipment available to you and/or your customers. Whether you're selling or buying capital equipment financing, keep the following in mind:

Equipment Leasing is a method to acquire materials without significant cash outlay.

How does it work?

Individuals and businesses can lease equipments. When a business needs equipment, they usually acquire it in one of three ways: Buy it outright with company funds, borrow funds to buy it, or lease it.

In order to decide which option is best --to lease or to buy using your own money or a loan, you must examine the benefits, costs, advantages, and disadvantages.

Unlike leasing, when you buy equipment, you own it outright. Unfortunately, you also own all the risks of loss, damage, repair, and obsolescence as well. However, with leasing, you not only can transfer these risks, you will have greater flexibility to upgrade and be current with technology. When you purchase equipment outright, you may not have such protections and it could eventually cost you your business.

Leasing will allow you to maintain a stable cash position even as you acquire new equipments to enhance production capabilities. It will also allow you to conserve and build up lines of credit. There could even be enormous tax benefits as well. Surveys have shown that 8 out of 10 businesses lease all or some of their equipments. Leasing is one of the most widely used forms of asset-based financing. No industry is excluded from leasing, and it does not matter in what State you are located.

Here are some of the distinct comparisons between a lease and a loan:

LOAN

• Would finance balance amount less initial down payment required.
• Requires additional collateral pledges.
• Have very restrictive covenants and financial liquidity ratios that may limit your ability to secure funds elsewhere.
• You bear all risks of equipment devaluation and or obsolescence.
• Only interests and depreciated values may be tax deductible.
• Owned equipments must be listed on Balance Sheet as assets with corresponding liabilities.
• Payments are made in the present expensive monetary value.

 LEASE

• 100% financing available, and usually does not require a down payment from you.
• Leased equipment is the only collateral required.
• Leasing will not restrict your ability to secure funds from somewhere else as long as your payments are current.
• You transfer all risks of obsolescence and there is no obligation to purchase equipment.
• Entire lease payments can be tax deductible.
• Leases are off Balance Sheet and may not have adverse effect on financial ratios.
• Inflation would make periodic payments less costly 

1. What Exactly Is Leasing
2. What Kinds Of Businesses Lease Equipment
3. Why Businesses Lease Equipment
4. What Can Be Leased
5. Does It Cost More To Lease
6. How The Lease Process Works
7. Who Qualifies To Lease
8. What Kinds Of Leases Are There
9. Who Do You Lease From
10. What Happens At The End Of The Lease  
11. How A Construction Lease Works