Equipment leasing has more benefits than purchasing outright.
Equipment leasing is a form of financing that more and more businesses are turning to when they are in need of equipment, software, or furniture. The main reason that businesses choose this option is because of all the benefits to it when compared to purchasing the equipment outright.
Equipment leasing payments are almost always tax deductible. It is important that you consult with a respected accountant so you know exactly what can be deducted. Most of the time a business can deduct the monthly payment completely. When compared to an outright purchase only the interest is tax deductible.
With equipment leasing it also is much easier for a business to get approved because they do not need large amounts of collateral to secure the property. With nothing down a business can have access to the equipment they need. Lines of credit are also left open when leasing which means that money can be used for other expenses that are necessary for success.
At the end of an operating lease it is required that the equipment be returned to the lessor. Some leases have a $1.00 Purchase Option or a guaranteed purchase amount (usually 10%). Other leases have a "Fair Market Value" purchase agreement where the amount is to be determined later.
There are many equipment leasing companies in our directory of funding sources.