Leasing vs Buying - Basic Facts About Leasing
When you are willing to buy something and you fall short of cash, leasing is always a better option than buying. That is, it is advisable to lease what you require. Thus, depending on the current situation and your needs, you must consider leasing equipment instead of buying them.
In the present scenario, leasing is indeed a very common practice in business. According to a report by the U.S. Small Business Administration (SBA), equipment leasing has risen approximately 20 percent over the last two years.
Some of the basic facts about leasing are as follows:
• Leasing is essential at every stage of development in just any business.
• In case of start-up businesses that have no revenues, smaller leases of approximately $100,000 or less can be easily managed. If the owners are willing to make monthly payments, the lease may be better managed on the personal credit of the owners.
• Equipment leasing is essentially a loan. At the end of the lease, the business can either purchase the equipment for its fair market value (or a fixed or predetermined amount) or continue leasing. It can also opt to return it or lease new equipment.
• Lease vs. Loan:
Unlike a bank loan or any other debt, a lease is not cancelable. A loan can be paid
off by selling the equipment. Alternatively, it can also be refinanced. On the contrary,
in case of a lease, the lease should be paid off in full. That is, all the payments
must be done when one enters a lease. Moreover, lease payments are smaller than
the loan payments.
• Leasing vs. Buying:
In case of buying, when a piece of equipment or vehicle is bought, the payment for
it is supposed to be done in full either by using cash or by financing the balance.
Once the payment is done, the buyer owns the equipment or the vehicle.
On the other hand, in case of equipment leasing, the equipment is bought and owned
by the lender and then it is rented to a business at a monthly rate for certain
number of months. In other words, with a lease, one has to pay merely for using
the equipment as at the end of the lease, the lender ends up owing absolutely nothing.
Leasing and Renting versus Buying - Answers From a Las Vegas Buyer Agent - leasing and renting