Lease or Finance

There are many "pro's and con's" when it comes to the Lease vs. Buy option. Here is a brief explanation of the advantages of each financing option.

Leasing

• Many financial analysts say the basic rule of capital investments is if it appreciates - Buy it. If it depreciates - Lease it. You make money by using equipment, not by owning it.
• Leasing does not affect your borrowing power, while preserving your savings and working capital.
• Dollars tied up in owning equipment represent a poor investment. Your capital is better utilized for investments that create larger returns.
• At the conclusion of your lease period, you will have the opportunity to purchase the equipment at Fair Market Value (FMV) 5%, 10% or 20% of its original cost or for $1.00. (purchase options)
• Since lease payments are generally regarded as fully deductible expenses, leasing may be a wise choice with solid tax advantages.
• You will never have to depreciate your equipment on your tax returns. Simplified bookkeeping.

• Financing is a term used for a loan. You own whatever you purchase. If you simply prefer to own your equipment and to know that what you've bought is yours, a finance is the right option for you.
• The tax laws for ownership have changed in the last couple of years and could effect you and your business. Based on current (1999) tax laws, ownership allows the buyer to expense up to $19,000* of the cost of new equipment placed in service during the year, with progressively higher amounts, up to $25,000 in 2002. The remaining cost is depreciated over the equipment's tax life. It should be noted that each state has it's own applicable laws pertaining to equipment expensing and the total tax deductible dollar amount may vary.
• You will not have to pay any purchase option at the end of the term, and no sales tax will be added to your monthly installment or payment. The price you pay for this option is usually a higher monthly payment and interest rate.
• Ask your tax advisor, which is best for you, before selecting a loan or a lease.

Or simply ask one of our account managers and they will explain everything to you in detail.