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Benefits of Equipment Leasing

Manageability and proximity are two of the benefits most commonly mentioned about leasing. As your business grows and your needs change, equipment leasing allows you to add or upgrade equipment at any point during the lease term through add-on or master leases. With leasing, you can have a tailor-made program to fulfill your demands respecting cash flow, budget, transaction structure and cyclical fluctuations. It also provides choices including installation, maintenance and other services.

With leasing, you only pay for the time you use the equipment, rather than paying for the whole price of the equipment. At the end of the lease term, the value of the equipment is called its residual. This residual value is built into the lease pricing so that monthly lease payments are usually less than monthly loan payments. Another reason leasing improves cash flow is because a down payment or additional collateral is not needed, so it is equivalent to 100 percent financing. These benefits allow you to address more budget dollars into revenue-producing applications.

Another advantage of leasing is the skill to move the chance of being left with out-dated equipment to the leasing company since the equipment can be given back at the end of the lease term. This also allows an equipment re-fresh so you can have the latest equipment affordably, and is especially important in quickly advancing equipment classes such as computers.

Ease of equipment disposition is another perk of leasing that cannot be undervalued. The price of removal, environmental fees, and remarketing, are avoided with leasing.

The handling of operating leases for balance sheet management and tax reporting also make leasing profitable. An operating lease is not reported as a long-term debt or liability, and does not appear on your businessís financial statement. So you take pleasure in the use of the equipment you require, while keeping favorable debt to equity ratios and other financial measurements required by traditional lenders in the event that you need them. For tax purposes, operating leases are treated as overhead expenses so lease payments are deducted from your corporate taxes, thus avoiding depreciation write-downs over the long-term.

Leasing also offers made-to-order solutions that allow you to tailor a program to fit month-to-month or year-to-year cash flow requirements. For instance, seasonal businesses may be permitted to miss one or more payments during a low season without penalty.

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