Aside from a reduced cash outlay, there are other advantages to leasing equipment: leasing can save you the time and hassle involved with a traditional loan, you can keep pace with emerging technology, short-term leases allow you to evaluate whether the equipment fits your needs, and your lease or rental payments are fully deductible.
Most business owners try to operate their businesses as efficiently as possible. While it may be easy to do without certain luxuries, there are some unavoidable costs that have to be paid one way or another. Acquiring the equipment necessary to run your business is one of those costs. Although leasing is not right for everyone, it is very cost effective for many organizations.
Often times, leasing allows companies to have access to a higher standards of equipment than the business could afford if buying it outright. Making smaller monthly payments can help a business obtain a product that they would not generally be able to afford.
Leasing allows businesses to get the equipment they need without having to pay a full cost upfront. By leasing your equipment, you will endure less initial costs than if you were to make full purchases but still get the products you need. Making monthly payments allows you to best budget your cash flow. The full cost of leasing equipment is generally deductible from taxable income. Leases lasting 5 years (sometimes 7) allow for the cost of your assets to be claimed as capital allowances.
The company selling you equipment is often able to suggest a leasing company. A good rule of thumb is to deal only with financing sources that have operated at least as long as the term of the proposed lease. Leasing makes upgrading equipment easy.
Because technology is constantly evolving, your company may want to use a new model after several years. Rather than having to worry about getting rid of your current model and purchasing a new one, you don't need to worry about disposing of assets you won’t be using in the future.
Leasing can also be an excellent hedge against obsolescence if you need equipment that needs to be updated on a regular basis.
Other leasing advantages include: getting a fixed - rather than floating - rate, avoiding cash-devouring down payments, and gaining immediate access to the most up-to-date business tools.