Are you making the decision to invest in a new copier or multi-functional system? There are some options for how you take the leap, and if you are investing in a piece of equipment that represents a substantial sum for your business, you may want to consider the options. Should you lease? Should you buy? We are happy to help you figure that one out, listed below are some points on leasing your machine that you may want to consider.
Flexibility of Lease
How flexible is the lease that you are walking into? Some key points to consider:
- Deferred rental payments
- Seasonal rental payments
- Balloon payments
- Quarterly rental payments
- Unequal periodic payments
- Periodic rental payments that begin low and increase throughout the term
- Period rental payments that begin high and decrease throughout the term
Small Initial Cash Outlay
Typically, a down payment is not required when you are leasing your machine, as is the case with most loans. The cash that you pay when you first receive the machine is typically applied to periodic rental payments.
You are likely able to deduct the entire rental payment as a current operating expense for your business for financial reporting and income tax purposes. Confirm with your accountant, but in most industries, this is the case.
Warranty Pass Through
Despite not technically owning the machine (as the lessor would be the owner) you still have the benefit of all of the manufacturer’s warranties and guarantees.
Expanded Credit Availability
Your “lease debt” should not be listed as a liability on your financial statements and will, as a result, preserve your borrowing ability should you require capital for another area of your business.
Avoid Financial Restrictions
Many loan agreements and/or credit line agreements greatly restrict any additional borrowing or financing. In general, equipment leasing does not have these restrictions.
Simplified Credit Process
An equipment lease is, typically, easier to obtain than an equipment loan. It is not uncommon for a leasing company to provide a substantially higher approval for lease than a financial institution would provide for a loan. To obtain a loan the credit history requirements are more restrictive and can prohibit your ability to gain the equipment that you require. On the other hand, in this instance, it maybe be worthwhile to seriously consider your equipment requirements and select a machine that fits your functionality and meets your budgetary restrictions.