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Why Lease?
Because it Makes
Economic Sense …!
Consider the following benefits of lease
financing for your next equipment acquisition:
 | Capital Conservation
Leasing allows an additional opportunity to put valuable capital to
work for corporate expansion, research, inventory purchases and
other profitable uses.
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100% Financing
Leasing can cover the entire cost of the equipment, including
freight and installation, without down payment or compensating
balance requirements. |
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| Preservation of Credit Lines
Leasing preserves existing lines of credit for previously earmarked
projects, short term or seasonal needs and other financial
priorities, while at the same time creating another valuable credit
source.
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| Fixed rate lease payments
A predetermined rent payment schedule permits a lessee to more
accurately predict its future equipment costs and cash needs. In
addition, by leasing major equipment items, a lessee knows the exact
amount of future payments and avoids the risk of fluctuations in the
cost of funds.
| Payments coordinated with cash flow.
Within certain limits, payment schedules can be designed to
coincide with earnings generated from the equipment use. Seasonal
activity patterns or projected business growth can be taken into
consideration. Because the timing of lease payments can be arranged
to follow normal business cycles, leasing offers a flexibility that
may not be available to a lessee with other financing methods.
| Convenience
Leasing is often more convenient than alternate means of financing.
Documentation is usually simple and more flexible than other sources
of capital, such as debt and equity.
| Obsolescence Protection
Leasing can make in time equipment replacement easier to
achieve. This can be achieved by structuring a lease term equal to
an equipment's economic rather than depreciable life, eliminating
ownership's natural tendency to "make do" and postpone
replacement until depreciation has run its course.
| Hedge Against Inflation
The outright purchase of equipment involves the partial recovery,
through depreciation, of the original investment. Taking inflation
into consideration, the recapture of this investment is accomplished
with tomorrow's less valuable dollars. Leasing has the opposite
effect, inflation continually decreases the net cost of the rental
payments, as you are paying with tomorrow's eroded dollars.
| Lease rental payments are made from pre-tax
rather than after-tax earnings.
A lessee may be able to amortize the cost of equipment faster
through tax deductible rentals than through depreciation and
after-tax cash flow.
| On or off balance sheet
A lease can be structured so as to be "on" or
"off" balance sheet for financial accounting purposes. The
choice depends on accounting objectives of the lessee, and other
cost trade-offs that the lessee is willing to make to achieve such
objectives.
| Loan covenants
Depending upon the language and intent of covenants in existing loan
and note agreements, a lease may provide financing not otherwise
permitted by them.
| Overcome Budget Limitations
Leasing can provide a prudent method of dealing with budget ceilings
that preclude the acquisition of needed equipment. It is frequently
possible to provide a lease to match available budgeted dollars and
at the same time allow for the procurement of far more equipment
than possible under other purchase plans.
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Copyright 2012, WRG
Financial Services Ltd. All rights reserved |
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"Buy
that which appreciates and lease that which depreciates"
Billionaire.
J P Getty
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Call
us today for a no obligation, consultation 905.689.1173
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