To Lease or To Buy
Owning a piece of equipment does not necessarily translate into making profits. The use of a piece of machinery to make a product is what makes a company income. Leasing provides an easy, affordable method of using equipment that allows a monthly payment without obtaining a bank loan or worrying about budget justification. Leasing also keeps your other lines of credit open and total system financing, including delivery and installation, can be spread over the lease term. When acquiring new equipment, leasing provides advantages such as:
- Conservation of cash: Leasing doesn’t require the cash outlay of a purchase.
- Longer terms and lower payments — Lease terms can be flexible up to 84 months.
- Periodic equipment updates — Reduce obsolescence risks with life cycle management.
- Manageable upfront costs — Little or no down payment.
- Purchase options — At lease end, purchase at agreed upon price or return the equipment.
- 100 percent financing — “Soft costs” such as installation, etc., can be added.
- Tax advantages — As an expense, lease payments may reduce tax liability.
- Simplified documentation — Minimal paperwork.
- Customized lease options and payment plans — Alternatives to meet your cash-flow needs.
- Time value of money benefits — Acquire equipment with today’s cheaper dollars.
Thomas Strickfaden, vice president, National City Manufacturing Finance