Leasing when Lacking the Funds

When businesses need machinery, computers, copiers or any other equipment but lack the cash, they often opt for a true lease agreement which is similar to renting a piece of machinery or furnishings for an extended period of time with the intention of exchanging, or upgrading items at the end of the term or when newer models become available. Lessees have the advantage of having access to state-of-the-art tools and accessories without paying top dollar. True equipment financing may be more popular because monthly installments tend to be lower than a equipment lease agreement, which works similar to buying on an installment plan. Companies which offer business accessories on a true lease can make more revenue by renting items again and again to various individuals and businesses. For example, a company finances a copier to a small firm for one year, at the end of which the lessee decides to upgrade to a pricier model with more features. The copier company has the option of leasing the older unit to another business owner, and another, until the original wholesale price of the copier has doubled or even tripled, especially when financing fees are added.

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