The right equipment will give your company a strategic advantage in terms of lower operating costs, increased productivity and an edge over competition. The right finance or lease program not only saves your company money, but can offer substantial tax incentives as well - 80% of all Fortune 500 companies finance or lease their equipment. |
Finance Leases (Lease to Own) - These typically allow the buyer to own the equipment at the end of the lease for just $1.00. Advantages include:
Low monthly payments.
Tax benefits: Many customers qualify for a $105,000 write off under Section 179 of the IRS Tax Code plus depreciation and interest expense. Always check with your accountant to verify how these tax benefits will affect your company.
Leaves your bank line of credit available for other uses.
Low down payments Preserves your working capital because leasing requires no down payment and provides 100 percent financing, including ancillary costs, such as shipping and installation. Operating capital is saved for revenue-generating investments.
Equity investment At the end of the lease, you own the equipment for $1.00 or the specified amount.
Longer terms with fixed rates Bank loans typically use floating rates and these can be called in anytime during the loan. Leases offer fixed payments through the entire term and are not callable on demand or subject to annual renewals.
Simplified paperwork.
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.
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Operating Leases - These leases usually have purchase options of 10 percent, 20 percent, or fair market value. At the end of the lease, you have the option to send the equipment back or purchase it for the stated purchase option. Advantages include:
Low monthly payments.
Tax benefits: Payments can be written off as an operating expense for tax and accounting purposes.
Off balance sheet treatment possible.
Minimizes risk of ownership.
End-of-term options include:
Purchase of the equipment for stated purchase option.
Renewal of the lease.
Return of the equipment.
As with finance leases, operating leases also offer low down payments, longer terms with fixed rates and the paperwork is minimal. They are also flexible and allow you to use available credit lines for other areas of your business.
Always check with your accountant or financial advisor to verify tax or accounting issues & any tax benefits.
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