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Lease vs Buy
Information you may want to consider
When today's equipment is likely to meet long-term needs,
purchasing is often the most cost-effective acquisition
choice. If, however, your needs are likely to change within
the next few years, leasing may be the smarter alternative.
Leasing allows you to acquire the equipment you need today and
use it cost-effectively until it no longer meets your needs,
then upgrade without dealing with the outdated and obsolete.
Does your business depend on staying on the
leading edge?
If your competitive advantage relies on the latest, most
sophisticated hardware, leasing should definitely be
considered. No matter how fast the leading edge is moving,
leasing helps you keep pace.
Do you need financial flexibility?
You may be able to expense your monthly rental payments rather
than depreciating the equipment cost, allowing you to order
new equipment as you need it (consult you tax accountant).
What does a
lease vs. purchase analysis tell you?
A "lease vs. buy" analysis compares the costs of leasing and
buying based on the assumptions used for residual value, cost
of funds, tax rates, and so on.
* Consult your tax and legal advisors for
specific advice on the potential tax benefits of leasing for
your situation.
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Can I avoid a large cash outlay? |
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Cash |
100% of cost |
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Loan |
Down Payment, often 25% |
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Lease |
100% Financing |
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Effects my bank credit line? |
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Cash |
Balance sheet impact |
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Loan |
Decreases credit line |
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Lease |
No money is borrowed |
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Effects operating capital?
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Cash |
High up front costs |
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Loan |
Down Payment required |
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Lease |
Low front-end costs |
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Payments
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Cash |
100% now |
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Loan |
Payments vary with interest |
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Lease |
Fixed payments, possible tax benefits* |
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Can I upgrade/add on easily?
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Cash |
No |
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Loan |
Re-application often required |
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Lease |
Yes |
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Can I schedule payments to
match my cash flow?
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Cash |
No |
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Loan |
No |
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Lease |
Yes |
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