Equipment Leasing Program
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An equipment leasing program may often be the financing option of choice for many companies that may need to keep the cash flow moving as freely as possible. Of course, there may be an issue as to whether or not renting (leasing) the equipment is best just by the type of gear that is under discussion. Sometimes the entrepreneur just beginning a business might forget or be unaware that leasing is a viable option. But a look at a few principles of the lease vs. buy argument might be helpful. So the first issue is the kind of equipment is under consideration.
Most people understand that electronic equipment such as officer copiers, computers, phone systems and other communication devices have a relatively short life, perhaps as brief as five years. With technology changing almost as fast as some movie stars change spouses, the reality of possessing outmoded equipment is very likely within just a few short years. In some cases, having this out dated equipment might actually hurt one's competitive edge. On the other hand, if a person is buying, say, earthmoving equipment, the technology hasn't changed much in the past fifty years, at least in terms of the physics of it all. Engines have improved and quality has improved but, a bulldozer bought today can and might still be in business twenty years from now. Often an equipment leasing program may not be as useful for this kind of purchase.
Whether or not it's an office copier or a crane, the principles of an equipment leasing program are the same. One of the most popular reasons for leasing anything commercially is because all lease payments are tax deductible when the gear is for business use. Buying a piece of heavy machinery can offer one slightly similar advantage in that part of the depreciation schedule of the equipment can be claimed as a business expense each year. Making the decision regarding a copier or computer will probably be a no brainer; a leasing program will win almost every time. But the bulldozer may be a different issue. A three hundred thousand dollar bulldozer may be depreciated over a ten or fifteen year schedule not giving the same yearly deduction as say, a full lease payment of twenty five hundred dollars per month might do. But when the five year lease is up on the dozer, a new equipment leasing program will have to be crafted on a new dozer.
But that new dozer is not much further advanced than the one just returned. So the lease will have to be on a new dozer at a higher price, or the one being returned can be leased again, or can purchased. Does a person need a new copier about every five years? That would probably be yes, and renting would make a lot of sense. The dozer won't run out of fashion or afoul of technology and the owner may be better off buying the thing. But all these issues on the high end gear can only be done by a financial expert who can compare an equipment leasing program to a purchase plan. Many of us say I am sorry pretty glibly, even to God, but scripture reminds us of the kind of heart we must have with Him. "The sacrifices of God are a broken spirit, and broken and contrite heart; O God, thou wilt not despise." (Psalm 51:17)
Apart from the attractiveness of a full write off payments, the other real desirability of renting has already been hinted at: the ability to stay current with new technology. When someone buys office gear, assuming that he might sell it in a couple of years for new stuff, there is always the burden of having to find a buyer and at a price both can live with. And usually the only way to do that is sell the gear oneself, because trading in gear is like giving the one accepting the trade one of your eardrums. It is always a losing proposition. With an equipment leasing program, when the final lease date has been reached, the provider will come and pick up the stuff and the business relationship is over.
In tougher economic times, when credit is harder to obtain and one must be an absolute angel of credit respectability to even get a whiff of interest from a lender, an equipment leasing program may be the only hope for a business owner to get much needed tools for productivity. For the business owner that is more credit challenged, it becomes very difficult to get money for purchasing equipment outright. And if a loan is approved, it will come with a much higher interest rate. The conditions for approving a leasing deal can be much different, and less stringent than purchasing. If the decision is to lease, then it might be wise to look for an equipment leasing program broker.
Finding a leasing broker can be as easy as looking online. Brokers do not charge their customers for their services. Rather, they are paid by the leasing companies for sending them the business. When a broker meets a client, he will get a profile of the customer's financial standing, and then find a lease company that will work with the customer to get an agreement completed. Making the decision to lease may be quite simple for a number of financial decisions, but for the large tools for business, consult a financial advisor who has no personal interest in whether purchasing or leasing is chosen.
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