1) Benefits of Leasing

2) Types of Lease

3) Important Questions to Ask When Leasing

4) Dealing with an Existing Lease

Benefits of Leasing

Conserves Working Capital
Leasing conserves your working capital by requiring only a minimum initial outlay of cash, usually just the first and the last payment. Your working capital is retained for more productive operational uses and business opportunities.

Frees up bank credit lines
Leasing preserves your bank line of credit so that you are prepared for an emergency or other unexpected demand for cash.

Hedge Against Inflation
Lease payments are based on the dollar's current value. These payments remain constant regardless of the future effect inflation has on currency value. Unlike bank lines of credit with variable rates, lease payments are fixed regardless of what happens to the market tomorrow making it easier to budget and forecast. You can acquire today's equipment with tomorrow's dollars.

Tax Advantages Operating leases are generally treated as 100% tax deductible business expenses paid from pre-tax earnings instead of after tax profits. Your tax professional should be consulted for more advice.

Avoid Obsolescence
Leasing provides companies with the ability to keep pace with technology. Leasing allows you to easily add-on equipment or upgrade to a complete new piece of equipment to meet future needs. Because flexibility is one of the greatest benefits of leasing, you never have to be stuck with old, out-of-date equipment.

Fixed Rate Lease Payments
Fixed payments enable you to accurately predict the impact on cash flow and protect you against inflation or stock market volatility.

Types of Leases

$ 1.00 Buyout
This program allows the customer to own the equipment at the end of the lease term for $ 1.00. Generally the monthly payments are higher for this type of lease . This option is recognized as a capital lease and treated as if purchased for Income Tax purposes. This type of lease financing allows the customer to assume all of the tax depreciation benefits that are obtained by owning the equipment. This lease is best for customers who know that their equipment won't lose its value and who want to keep it at the end of the lease.

Fair Market Value
This type of lease offers the lowest possible lease payment with an end-of-lease purchase option not to exceed the fair market value of the equipment. This type of lease may have significant tax advantages. This plan offers the most options at the end of the lease. Equipment can be purchased at its Fair Market Value, returned, or the lease can be extended. This type of financing is best when the value of the equipment is expected to decrease quickly, or who want to upgrade their equipment at the end of the lease term. With this type of lease, you get to write 100% of the lease payments off as an operating expense.

Important Questions to Ask When Leasing

1. Who is providing the leasing services?
Many frims use corporate leasing agents who may sell your lease to third parties several times during the course of the lease.

2. What fees are associated with the lease agreement?
Leasing companies often have numerous hidden fees and charge up to several thousand dollars over the term of the lease agreement.

3. How easy is it to talk to someone about billing issues or other concerns about my lease?
Many large lease companies have difficult to navigate voice systems. Sometimes it is diffcult to clear up minor billing issues.

4. What happens to the equipment as the lease ends and I choose not to buyout?
One major hidden expense is the return of the equipment. Most leasing companies require you ship the machines to a warehouse across the country costing several hundreds if not thousands of dollars.

Dealing with an Existing Lease

Some customer find themselves in the situation of having an exisitng lease on aging equipment. In these cases we can eliminate and/or consolidate all existing leases. Call us today to see how we can help you with your leasing needs and reduce your total cost of operations.