Leasing is the use of an asset. No business pays it employees’ salary in advance; they pay people as they contribute. It should be no different with a contributing asset like business equipment. Leasing enables you to pay as you use.

Monthly payments on a lease are generally fixed for the entire term of the lease. This is a distinct advantage in times when many financing transactions are floating interest rates. Knowing in advance what your payments will be, enables you to budget and manage equipment dollars for a long time.

Most traditional financing options require a sizable down payment. On cash purchases, this can be as much as 20%. Little or No down payment is required on a lease.

Traditional methods of financing options usually do not include “soft” items such as installation and freight. A good lease transaction contains both of these; therefore, allowing you to finance the total package.

Leasing provides the lessee with greater structuring flexibility. The leasing industry is typically populated by aggressive entrepreneur types who find ways to structure lease transactions to fit the needs of their customers. This gives a lessee the opportunity to make the most of such lease structuring variables such as: number and amount of advance payment amount, purchase option, etc.

Leasing programs and procedures are specially designed to take the red tape out of financing capital equipment for business.

Most lease arrangements allow customers the option to either purchase at a stated amount, at a Fair Market Value, or to renew the lease at a reduced monthly payment. The lease structure determines which of the options is available.

Because of the sizable cash outlay involved in purchasing new equipment, many businesses lease to conserve capital. Money that could be used to buy inventory, advertise, and hire personnel is better spent doing just that rather than spent purchasing equipment that is diminishing in value as time goes by.

Leasing, which is simply dollars-per-month financing, helps an equipment user fit a monthly payment into their budget limits. They don’t have to go to capital expenditure committees for approval.

Subsidiaries of large corporations or department managers of small companies have the authority to acquire equipment they need, but only if it fits within operating budget guidelines. Many managers decide to acquire needed equipment via leasing because it allows them to have the use of equipment and still work within operating budget limits. They don’t have to go to capital expenditure committees for approval.

Just as businesses have done for years, a lessee can usually deduct their monthly lease payment as an operating expense. This clearly reduces the new cost of the lease. It is always best to talk to your tax accountant.

When dollars are already budgeted, managers who need newer equipment can conveniently acquire that equipment on a dollar-per-month basis since the monthly payment precedent has usually been established.

When equipment is bought with borrowed funds, credit lines with a lender are reduced. When equipment is leased, a business has in fact established an additional line of credit with its lessor.

Many lessors are in the position to lease just about any type of equipment.

Your new machinery and equipment will allow you to preserve your existing cash flow and to be able to respond to new business opportunities. The profits generated from the productivity of the equipment is usually greater than the lease payments.