Advantages and Benefits of Equipment Leasing

 

There are three ways to beat the competition.

Do it better, do it faster, or do it cheaper.

By leasing the latest equipment at the most competitive rates you can achieve all three.

Leasing makes sense.

Ask your accountant, your financial advisor, or the financial officer in charge of any company making itself to the top. Leasing is the answer to conserving capital while putting the best equipment available to work for you.

Leasing promotes growth, and here are just a few reasons why:

  • Leasing Conserves Capital - Money that would otherwise be spent for the purchase of depreciating equipment can instead be invested in avenues of growth actually strengthening your financial position.
  • Leasing Promotes Growth - If it appreciates, buy it. If it depreciates, lease it. Ten years ago you may have started your business by leasing a building and purchasing equipment. Today, the building you are still leasing has likely doubled in value while the equipment you purchased is worth a fraction of it's original price. Had you of purchased the building and leased the equipment things might be quite different.
  • Competitive Advantage - Purchased equipment is often used and maintained (sometimes at great expense) over it's entire depreciable life. During the final years of service, some business may be lost to the competition who, using newer and better equipment can afford lower prices. By leasing, you are able to continuously upgrade to the latest technology giving you the competitive advantage.
  • Tax Advantages - In Canada, you don't pay tax on the full purchase of the equipment when leasing it. Instead, you are taxed only on the portion of the equipment used over the course of the lease. The taxes are added to each payment and when the lease expires, no more taxes are payable by the lessee.
    You may also be able to claim your lease payments as an operating expense rather than a capital expenditure allowing you to claim the payments as a deduction against net income thereby lowering it, and making less tax payable.
  • No Unexpected Repair Costs - Many people choose a leasing term that corresponds to the manufacturer's warranty on the leased equipment. This ensures that if something serious should go wrong, it's covered and your operating costs remain constant.
  • Lower Payments - Because you are only paying for the portion of the equipment used over the term of the lease, your monthly payments can be much lower (30%-60%) than loan payments for purchasing the equipment over the same period.
  • Low or No Down Payment - Leasing often requires little or no down payment allowing you to keep your cash reserves ready for any investments where it can grow.
  • Leasing can Include All Costs - After financing your equipment you may still have sizeable expenditures covering the cost of actually putting the equipment into use. With leasing, these additional expenditures can be included, and amortized over the live of the lease reducing the initial impact.
  • Keep your Credit Available - Leasing is a great way to get the equipment you need now without reducing the line of credit available to you at your bank.
  • Leasing Pays For Itself - Quite often the boost in productivity from using newer, more productive equipment with less down time can more than offset the cost of leasing the equipment.
  • No end-of-use Sell off Blues - When your equipment is ready for an upgrade, you won't have to wait till you find someone to purchase the outdated equipment before upgrading to more efficient equipment. At the end of your lease, you simply return the equipment to the lessor and upgrade to the latest.

 

HOW TO EFFECTIVELY APPLY FOR AN EQUIPMENT LEASE - FLOWCHART

 

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