Why Do Companies Lease?
There are many reasons why companies lease their equipment. Leasing provides flexibility and protection against technological obsolescence. Leasing allows a company to better match cash outflow with revenue production through the use of equipment. Leasing conserves valuable working capital and bank lines. Leasing is efficient, convenient, and allows for 100% financing.
Top Ten Reasons Why Companies Lease
1. Purchasing Power. Lease financing allows the lessee to acquire more and/or higher-end equipment.
2. Balance Sheet Management. Certain types of leases help the lessee better manage the balance sheet and improve the overall financial picture, by conserving operating capital and freeing up working capital and bank credit lines for inventory, expansion and emergencies.
3. 100 Percent Financing. With leasing, there is no down payment. The term of the lease can be matched with the useful life of the equipment.
4. Asset Management. A lease provides the use of equipment for specific periods of time at fixed payments. It assumes and manages the risks of equipment ownership. At the end of the lease, the lessor disposes of the equipment.
5. Service Additions. Many lessees choose to structure their leases to include installation, maintenance and other services, if needed.
6. Tax Treatment. Leasing offers the option of deducting 100 percent of the lease payment as a business expense.
7. Upgraded Technology. Leasing provides companies with the ability to keep pace with technology. The lessee can upgrade or add equipment to meet ever-changing needs.
8. Specialized Assistance. Lessors are specialists in equipment leasing and financing, and understand capital equipment markets.
9. Flexibility. There are a variety of leasing products available, allowing the lessee to customize a program to address needs and requirements - cash flow, budget, transaction structure, cyclical fluctuations, etc.
10. Proven Equipment-Financing Option. Over 30 percent of all capital equipment in the United States is acquired through leasing. In fact, eight out of 10 companies lease their equipment.
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