Search

Business People Club

Search All Topics !

Leasing Equipment Versus Buying?

0 like 0 dislike
47 views
Posted by MysteryWasp
Leasing Equipment Versus Buying?

Avast

Your comment

Your name to display (optional):
Privacy: Your email address will only be used for sending these notifications.
Anti-spam verification:
To avoid this verification in future, please log in or register.

1 Comment

0 like 0 dislike
commented by GamerAlpaca
Short on cash, but need equipment? Consider leasing what you need. Leasing equipment may be a better alternative to buying, depending on your situation and needs.

Today, leasing is common practice in business. Over the past two years, equipment leasing has risen approximately 20 percent, according to recent research by the U.S. Small Business Administration (SBA). And 8 out of 10 U.S. businesses lease all or part of their equipment, reports the Equipment Leasing Association.

Leasing is appropriate for just about any business at any stage of development. For start-up businesses with no revenues, smaller leases—those of $100,000 or less—may be better managed on the personal credit of the owners—if they are willing to make the monthly payments.

Comparing Leasing to Buying When you buy a piece of equipment or vehicle, you usually have to pay for it in full either by using cash or by financing the balance. After you finish paying for it, you own it.

Equipment leasing, on the other hand, is essentially a loan. The lender buys and owns the equipment and then "rents" it to a business at a flat monthly rate for a set number of months. At the end of the lease, the business has several options. It can purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, return it or lease new equipment.

With a lease, you actually only pay for using the equipment. But at the end of the lease period, you could end up owning nothing. So why lease? The answer is simple: By leasing equipment, you leave money in the bank that can be used for other purchases. Since lease payments are usually smaller than regular loan payments, you don't have to pay out as much each month.

However, keep in mind that a lease is not cancelable like a bank loan or other debt. If you need to get out a standard loan you can sell the equipment and pay off the loan, or even refinance it. With a lease, you generally have to pay off the lease in full. So you have to be sure you make the payments when you enter into a lease.

So what kinds of equipment make the most sense for a small business to lease? According to research by the SBA, the most common items leased are office equipment, computers, and trucks and vehicles.

Benefits of Leasing Leasing equipment offers a wide range of benefits, from consistency with expenses to increased cash flow. But perhaps the most significant advantage of leasing is the ability to maintain up-to-date equipment. Leasing allows you to easily and affordably add equipment or upgrade to a complete new piece of machinery to meet future needs. This lets you transfer the risk of being caught with obsolete equipment to the leasing company.

Here are some other benefits of leasing:

• Alternative to financing - Leasing is essentially an alternative to traditional financing and can be great for companies not able to obtain business loans.

• 100-percent “financing” – In many cases, leasing requires no down payment. This allows you to “finance” an entire purchase, including software, hardware, consulting, maintenance, freight, installation, and training costs.

• Ease and convenience - Applying for a lease is easy, and lease arrangements can be structured to meet your individual requirements. Equipment leases can range from $ 2,000 to $ 2 million. For smaller amounts, you can complete a brief application and receive a final decision within days—often with no financial reports or tax returns needed. Leases for more than $100,000 generally require detailed financial information from the business, and the leasing company conducts a more thorough credit analysis than it would for a smaller

• Flexibility - Lease terms range from 12 to 60 months, depending on the equipment type. Most leases can be structured so that payments are made with operating rather than capital funds. This can eliminate or reduce capital budget delays. Leased equipment can be purchased later if capital becomes available. Plus, a percentage of the lease payments can be credited toward the purchase of the equipment.

• Fixed, predictable payments - Having fixed lease payments enables you to accurately predict the impact of equipment expenses on your cash flow.

• Conserves working capital - Leasing conserves your working capital by requiring only a minimum initial outlay of cash.

• Tax Advantages - Operating leases are generally treated as a 100-percent, tax-deductible business expense paid from pre-tax earnings instead of after-tax profits.

• Protection against inflation - Lease payments are based on the dollar's current value. And unlike bank lines of credit with fluctuating rates, your payments are fixed regardless of what happens to the market tomorrow, making it easier to budget, forecast and grow.

Working with a Leasing Companies When leasing equipment, keep in mind that the company selling the equipment simply makes a direct referral to a leasing company with which it does business. And, usually, the company selling the equipment works with more than one leasing company. So be sure to get quotes from a number of leasing firms. It’s also a good idea to ask for referrals from friends and business associates.

Additionally, make sure you understand with whom you’re dealing. Are you talking to a broker—the person who simply structures deals, then gets them financed through any of the leasing companies he or she works with. Or are you dealing with a leasing company that is actually putting its own funds on the line?

Brokers can be beneficial because they have valuable insight about the leasing market and can help you find the best leasing solution for your needs. But as when dealing with any type of salesperson, you are responsible for handling the due diligence. Do your own homework to ensure you negotiate the most favorable lease agreement for your company.

Related posts

0 like 0 dislike
1 Comment 133 views
How to find a Restaurant Equipment Supplier Crucial for New Restaurant Owners ?

How to find a Restaurant Equipment Supplier Crucial for New Restaurant Owners ?

Posted by PlushSeal
0 like 0 dislike
0 comments 30 views
Buying A Franchise

Buying a franchise can be a life changing experience. There are many good reasons to pursue your dream of owning a successful ... Consultant and decide if buying a franchise is right for you.

Posted by AmazingKitty
0 like 0 dislike
0 comments 743 views
7 Questions Consumers Ask Before Buying Your Product

1. What's the deal? Customers want to know what they are getting into before they open up their wallet. One of the best ways to ... , they'll just forget it... and you can kiss your profit goodbye.

image
Posted by Hawkward
0 like 0 dislike
0 comments 80 views
Business Buying Guide - Detail

Business Buying Process First, You have to determining your investment. Usually minimum down payment made by the buyer is 30% of the ... . And then you can do the closing on the closing date.

Posted by TwinNut
0 like 0 dislike
0 comments 112 views
Three Things You Should Know Before Buying a Business Franchise

Business franchise refers to the arrangement entered upon by the owner of a certain business with another party who is interested in ... with the company that's tried and tested over the years.

image
Posted by TrainedGuy
0 like 0 dislike
1 Comment 142 views
Don’t Let Passions Rule When Buying A Business

Don’t Let Passions Rule When Buying A Business

Posted by Camella
0 like 0 dislike
1 Comment 67 views
What to look for when buying a laptop?

What to look for when buying a laptop?

Posted by Titank
0 like 0 dislike
1 Comment 105 views
Laptop buying tips

I am buying new laptop. What to look for when buying new laptop?

Posted by HairyFoal

online business.png

Connect with us:
...