Equipment Lease Can Help Your Business More Than Purchasing or Loans

Leasing is a process by which a company or person can obtain the use of specified fixed assets in by paying a series of periodic or contractual payments.

The most common form of leasing is when a property owner leases or rents space to a tenant. This can be in the form of apartment rental or building space leasing. Car rental is another form of leasing. Equipment lease can come in the form of heavy equipment or other equipment like gym fitness machines.

The normal terms of a lease are fixed, periodic, and indefinite. A fixed lease duration ends automatically when the term expires. Periodic leases are renewed automatically by both parties either on a weekly or monthly basis. Sometimes it can be on an annual basis. An indefinite lease will go on with no fixed time period or renewals and will continue as long as both parties want it to. It may be terminated anytime with no penalties.

Equipment lease is gaining popularity among businesses because of the monetary advantages as compared to purchasing equipment or obtaining loans. The value of equipment is seen in its usage, and not necessarily owning it:

Equipment lease is 100% tax deductible because lease payments are considered as pre-tax operating expenses.

In leasing, no large downpayment is needed. No up-front cost is required so the equipment immediately helps to generate revenue.

Leasing means a company’s credit sources are kept open. Credit lines are thus, reserved for any urgent short-term requirements or long term plans like improvements or expansions.

A company is not faced with the burden of owning equipment that may grow old or obsolete. When a new generation of equipment comes out, the tenant can simply upgrade.

Because lease payments are only a fraction of the cost of actual equipment, more equipment can be leased which allows a company to increase their work load or decrease labour costs.

Lease terms can be selected starting at 12, 24, 36, and up to 60 months.

Lease programs can usually be customized to be adjusted for tailored payments based on seasonal cash flows. There are even options available to tenants at the end of the lease term whether to upgrade to new models, continue with the old rental, return the equipment, or to move on to a lease-to-own to keep the equipment.

Find more information about equipment lease here!