Everybody is probably familiar with the word “leasing.” An example would be leasing some car. If we are dreaming of driving a car that is too expensive for our budget or dream of changing the car every now and then, then leasing a vehicle becomes a good option.
A company that is short on budget and rather needs equipment, can choose to lease it. The owner of the equipment obtains it through a loan, and subsequently rents that to an organization for a specified monthly fee. There are all types of equipment being offered for lease, such as medical and transportation equipment. Equipment leasing is available through many different companies specializing in such.
Should my firm choose to lease, otherwise acquire the equipment?
One must first consider the different parameters when it comes to leasing, if not buying an equipment. The financial aspect is one of the major factors to be considered. If we would like to purchase the equipment, should we get the needed credit? The equipment is perhaps prohibitively costly for a start up business.
If the equipment is purchased, we will be able to claim some tax benefit equal to the equipment’s depreciation value. But, if we instead lease it, are we entitled to tax deduction, which corresponds to our lease payment? In other words, a person must be very familiar with the guidelines concerning taxes and the particular lease terms when concluding the lease. At the same time, keep in mind that financing for a lease is often more expensive when compared to bank financing. But then, it’s easier to get for minimal amounts. We can as well easily advance the equipment when the lease is completed and without stressing about putting up the outdated one for sale.
How to go about leasing the equipment
Whenever we decide on equipment leasing, we need to search for the most excellent deal. The best deal will pave the way for the business to succeed. An adverse deal, on the other hand, may lead to the failure of an emerging company. Thus, it is a must to carefully check the legal nuances of the lease agreement. A good leasing firm will find the best deals available and will see to it that all legal matters particular to the deal are taken care of.
Equipment leasing offers an option to a company that maybe diversifying and does not intend to purchase the equipment. Or it is possibly a wonderful option for any start-up company. Even if equipment leasing can be more costly, it is still a great option for any business to consider, especially those who would like to upgrade and switch equipment regularly.