Things to Consider Before Leasing Equipment

  • Published on
    19-Jan-2015

  • View
    212

  • Download
    0

Embed Size (px)

Transcript

  • New equipment can represent significant costs and significant

    opportunities because equipment can offer increased capacity,

    efficiency, and new lines of business. It is important that a company

    carefully considers the differences in leasing versus buying. The

    answer, of course, will vary based on a number of factors unique to

    the company.

  • There are substantial tax differences in leasing

    versus buying. Most lease payments are counted

    as an expense and therefore reduce your tax

    burden. This is something to keep in mind when

    calculating the actual cost of the lease. On the

    contrary, with buying, there are depreciation

    deductions depending on the cost and type of

    equipment.

  • Depending on the viability of the equipment in question,

    leasing may be the best option. Its possible that the equipment

    will be significantly improved in five years or even obsolete. In

    such cases, leasing is ideal. If the equipment is unlikely to

    improve much in the near future, buying may be the best option

    because you will continue to get value from the equipment after

    its paid off.

  • A lease may be the best option

    when considering the list of other

    things that money must be spent

    on. When money will ultimately

    need to be tied up elsewhere,

    leasing provides lower upfront

    costs, which frees up capital.

    Everything should be considered,

    including HR and marketing

    promotions, as well as other

    equipment.

  • Often, there are lease contracts

    for the purchase of equipment

    at the end of the agreement.

    This should be determined

    upfront so its clear if a buyout

    clause needs to be in the lease

    agreement.

  • Leasing usually includes costs for delivery,

    installation, and other deferred costs. Even

    though leasing is a monthly cost, it usually

    provides lower monthly costs than other

    options. You can analyze the costs of a lease

    versus a purchase through a discounted cash

    flow analysis. Assumptions about the

    economic life of the equipment, salvage value,

    and depreciation must be calculated into the

    analysis.

  • Who are you collaborating with?

    How long has the company been

    in business?

    Do you understand all terms and

    conditions of the lease from start

    to end?

  • Is casualty insurance included?

    Who pays the personal property tax?

    Are there options to upgrade and trade in

    equipment before the lease expires?

    Is maintenance included?

  • Nations Equipment Finance was founded in September 2010 by former GE Capital

    equipment finance professionals who have originated and managed multi-billion dollar

    portfolios of equipment lease and term loan investments across various industries and

    collateral types. We have significant committed capital available to invest in equipment lease

    and loan transactions. At NEF, we are committed to identifying your specific financing needs

    and delivering a customized solution.

    We strive to build solid relationships

    with customers and support them,

    both now and in the future.

    Website: http://www.nationsequipmentfinance.com

    Email: info@nationsequipmentfinance.com

  • There are many benefits to leasing equipment. Benefits include maximizing on tax

    advantages, keeping pace with emerging technology, evaluating whether the equipment

    fits your needs, and reducing costs.

    Summary