CONSERVES CAPITAL
No large cash outlay
Capital not being tied up in depreciating equipment
Utilization of cash for capital appreciation opportunities
BUDGET CONSTRAINTS
This is especially important for any non-profit operation, i.e. Churches, Government Offices, etc. Often the major issue here is that the business only receives a certain budget for the year but if they use it to buy a major piece of equipment, they either do not get all of the equipment or the exact items they would like because of the budget restraints. However, with monthly lease payments their budget should be able to allow for all of the equipment, For example: if a church has $12,000/year for equipment, that would likely not be near enough to them to acquire a complete package or system, however, if they use this amount on a lease with payments of $12,000/year over the term of a lease this would allow for a much higher equipment cost over the term without going over the budget. This could be written on a $10.00 buyout at the end of the lease payments as there usually isn’t any incentive with tax write offs of a fair market value lease.
TAX ADVANTAGES
In most cases a lease can be tax deductible as a business operating expense
Lower after-tax cost due to accelerated write-off over lease term
FIXED COSTS
A lease is 100% term financing at fixed rates no matter what. Unlike bank rates or lines of credit which can fluctuate very high with their variable rates
CONSERVES CREDIT LINES
Leasing allows you to free up your credit lines for appreciating investment opportunities.
Your borrowing power stays intact.
AVOIDS OBSOLESCENSE
With a lease you can upgrade your equipment at any time which means that you can lease what you require today and as it gets obsolete or outdated you can trade it in for new equipment in order to stay competitive.
Remember, benefits are derived through the use, not the ownership of equipment