As businesses prepare to compete and grow in a challenging economy, many are searching for proven new ways to address their equipment financing needs. The choice for many businesses is clear: equipment leasing.
Choosing the right structure for your equipment financing needs is crucial.
Types of Equipment Leases
Equipment leases can be structured as:
- Capital/Finance Leases (For example: $1 or 10% Purchase Option)
- True/Operating Leases (For example: FMV Purchase Option)
- Municipal/Not-for-Profit Leases (Tax-Exempt)
It is important to point out that leases are not loans. As a result, their costs are figured differently from loans. To compare types of equipment leases, it is better to compare monthly payments than to try to compare loan interest rates with lease rates. On a cost-of-capital basis, equipment leasing may be the least expensive option.
Equipment leasing companies can offer competitive rates for a number of reasons. Lessors – with their volume purchasing power – can secure attractive financing deals and pass along the savings to the lessee.
What Type of Lease is Right for You?
Once you’ve completed your evaluation and decided to lease your next equipment acquisition, the first step is to select the type of lease that fits your needs.
When deciding which type of lease is best for your company, you should consult with your CPA/Accountant/Tax Advisor. It is important to keep in mind:
- How long you want to use the equipment
- What you intend to do with the equipment at the end of your lease
- Your tax situation
- Your cash flow
- Your company’s specific needs as they relate to future growth
You also will need to determine what happens at the end of the lease.
To design an equipment leasing plan that best meets your needs, you need to understand your options. Discuss any questions or concerns you have with your lessor or tax advisor.
If you want to learn more about equipment leasing, contact Advantage Leasing. Advantage Leasing Corporation is a national, independent leasing company based in Milwaukee, Wisconsin that provides flexible financing options for new and used equipment ranging from $5,000-$250,000.
Contact us online or call us at 800.949.7040.