EQUIPMENT LEASING: A FINANCIAL TOOL YOU SHOULD CONSIDER

The question is often asked. "Why Lease?" The answer is not difficult because equipment leasing is based on a simple truth: the primary value of equipment comes from using it, not owning it. When you lease, you acquire the use of equipment for a specified length of time which is is usually tied to its productive life in exchange for periodic rental payments. Simply put, leasing is a financial tool. When this tool is used wisely, it can help you manage your capital to its fullest potential.

Leasing isn't for everyone. Leasing has some specific requirements including credit qualification, but any individual or business can qualify for a lease. Leases are frequently utilized by sales professionals, doctors, lawyers, accountants, industrial and manufacturing companies, non-profit organizations and governments. Terms of leases are generally from one to five years, and set up with equal monthly payments

THE FLEXIBILITY OF LEASING

Leases can be structured to meet equipment and machinery needs for a variety of businesses. Some examples are:

construction restaurant and food service all types of manufacturing material handling office furniture and computers printing and graphic arts trucking and transportation medical

At the end of the lease period, you decide what is best:

return the equipment and make no further payments apply the equipment's trade-in value to a new lease arrange to purchase the equipment at its then fair market value arrange to trade-up the equipment to new and better leased equipment and your new lease cost renew the lease at a reduced rate

THE BENEFITS OF LEASING

Leasing allows the acquisition of needed equipment immediately, while retaining the use of working capital. Increased productivity or reduced costs usually more than offset leasing payments.

Leasing provides capital conservation and potential for maximum return. Working capital intended for equipment purchase can be retained in the business to earn a higher rate of return.

Leasing provides an additional source of credit. As a lease is independent from other sources of financing, it extends credit limits, leaving more traditional sources open should they be needed.

Leasing payments are fully tax deductable. Purchasing depletes past profits while a lease is paid for in pre-tax income. Ownership defers most depreciation to later years while leasing allows a 100% write-off lease costs each year. The result - taxes are deferred.

Leasing takes advantage of inflation. Instead of buying with today's dollars and then depreciating your equipment with tomorrow's eroded dollars, you reverse the process. You have the use of today's expensive equipment, but your payments are made in dollars that will have decreased in value.

Leasing helps reduce obsolescence and promotes upgrading. Technical advances can render equipment either obsolete or "behind the times" in a relatively short period, or the growth of an organization can necessitate changing no longer adequate equipment. The flexibility of leasing handles either situation easily and economically.

Leasing facilitates budgeting. Leasing simplifies budgetary and cost controls. Operating results can be more readily evaluated and profit situations more easily determined where costs are precisely known.

Leasing simplifies bookkeeping. Lease payments can easily be allocated to the proper departments. Sizable depreciation schedules are eliminated as well as capital account ledgers and other internal equipment controls.

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