Welcome to www.OnlineOrganizing.com -- A World Of Organizing Solutions Your Order Your Shopping Cart About Us Contact Us Site Map
Do You Need Help Getting Organized?Shop For Organizing And Business Development ProductsProfessional Organizing ServicesFind A Seminar, Workshop, Or Keynote SpeakerRead Our Two Free Monthly NewslettersFree Organizing Tips And AdviceResources For Professional OrganizersLearn How To Become A Professional OrganizerUseful Organizing Website LinksUseful Organizing Website Links


Search for:

Category:


Here are some random keywords you might like to explore:

You Are Here: Home - Newsletters - "Organized For A Living" - Article

     Should You Lease Or Buy Office Equipment?


Equipment FINANCING in its various forms is a multi-billion dollar industry. And since we live in an age where there are more businesses now -- as well as more businesses being started than at any other point in history -- the equipment finance industry will continue to grow at a fast rate now and into the future.
DIFFERENT KINDS OF FINANCING

Just 30 years ago the main type of equipment financing was the "borrowing to buy" method, or DEBT financing. Otherwise, the company had to purchase the equipment outright, which only a few companies could do. The form of equipment financing known as LEASE financing has grown at a very fast rate as well over the past 30 years, and is largely responsible for the overall boom of the equipment finance industry as a whole. When lease financing came along it gave companies more options and FLEXIBILITY in obtaining the business equipment they needed -- particularly small and medium sized companies without large blocks of retained earning that they could use to buy equipment outright. Both forms of equipment financing -- debt and lease -- offer advantages and disadvantages. Thus, a business should look closely at both, their particular situation, and the various options available to them.
HOW MUCH UP FRONT

With debt financing lenders very often require large DEPOSITS or equity investments that can range from 25% to 50% of the price of the equipment. This is not so with equipment leasing -- where large outlays of capital are not needed. Equipment leasing will allow a company to RETAIN valuable operating capital, which can be used to create more profits -- thereby lowering the overall cost of leasing the equipment.
YOUR BUSINESS CREDIT

Another factor in favor of leasing equipment deals with a companies ability to borrow capital, either to take advantage of opportunities or to avoid catastrophe. If a company takes out a loan to buy business equipment, its AVAILABLE lines of credit for other purposes are diminished because the loan is carried on the company's books as a debt. But, with leasing, the equipment is not usually carried on the books as a debt. It is simply listed on the books as a footnote, so a company's ability to borrow capital is not impaired.
WHO HOLDS THE PINK SLIP?

One factor in favor of borrowing to buy business equipment concerns equipment OWNERSHIP, and the fact that once the equipment is paid for the company owns the equipment. Equipment that can have many years of useful life left and can continue to produce profits for years to come. It can also have some COLLATERAL value that the company may borrow against in the future. You don't have this with a lease. However, today many lease lenders now offer various lease-purchase options.
THE BOTTOM LINE

Cost is another factor in favor of a company borrowing to buy business equipment, rather than leasing it. It will cost LESS in actual dollars and interest costs to borrow to buy business equipment than it does to lease the same equipment. Yet there are other factors involved with leasing business equipment that can LOWER the overall cost of leasing -- for example, future lease payment will be paid with inflated dollars, so a company's capital will go farther.
OTHER ISSUES

And, of course, you need to consider tax issues, equipment DEPRECIATION, your company's financial goals, other obligations, and other places where you might be spending your money (and getting a better return). Therefore, the decision to lease or buy business equipment should be based on the advantages and disadvantages that both offer, and other opportunity COSTS involved. If you need help determining which is the best choice for you, consult with your financial planner or accountant -- he or she should be able to help you weigh the costs versus the benefits.

 

Berwyn J. Kemp is a financial consultant who helps businesses obtain funding. For full information on his funding products and services. You may contact him at .


Would you like to reprint this article in your publication -- or distribute it to a wider audience? Click here for reprinting instructions.

Want to receive these kind of articles via e-mail each month? Sign up for a free newsletter subscription.

Click here to return to "Organized For A Living" -- June 2003...

Add this page to your Bookmarks!

E-mail this page to a friend!







www.OnlineOrganizing.com is a service mark of Bradford, LLC.
Content on this site is © Bradford, LLC, All rights reserved.

If you notice any problems with this site, please contact our webmaster.
And if you don't see what you need you are welcome to "ask the organizer" any question!

To see what people are saying about www.OnlineOrganizing.com, check out our visitor comments.

Click here to view our privacy policy.

Calendar Of Organizing Holidays And Events Blog Central Sign Up For Our Free Online Newsletters Join The Conversation At Our Organizing Discussion Board Advertise Your Company On Our Website Be An Affiliate Of www.OnlineOrganizing.com
Check Us Out On FaceBook