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Eight out of every 10 companies in the United States lease some
or all of their equipment. To determine if leasing is right for
you, ask yourself:
- Should I spend the cash, or would it be better used elsewhere?
Whether you purchase equipment outright or obtain a bank loan,
you will need a substantial portion of your company's cash.
- What is the active life of the equipment? A lease can be structured
to allow for upgrading your equipment without increasing your
monthly cost.
- What can I afford? Receivables are constant and operators should
know what each piece of equipment will yield. Lease or loan payments
should reflect this.
- Do I need a structured payment plan? A lease payment schedule
can be structured to allow for 90 days deferred or seasonal payments.
- Is the payment floating or fixed? Many bank loans have floating
rates, while lease rates primarily are fixed. If interest rates
are high, a floating rate may be more economical. However, if
interest rates are low, it's best to lock in to a fixed payment.
- Can I afford a down payment? Leasing requires no down payment
and offers flexible, extended terms.
- Does the lending source allow me to include soft costs (freight,
supplies, training, etc.)?
- Is there a possibility that I will pay the loan/lease off early?
A lease is a binding contract for the time stated and may carry
a penalty for early payoff.
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© 2003, PRIMEDIA Business Magazines & Media Inc. All rights
reserved. This article is protected by United States copyright and other
intellectual property laws and may not be reproduced, rewritten, distributed,
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or indirectly, in any medium without the prior written permission of PRIMEDIA
Business Corp.
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