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Benefits
of Leasing:
- Low
Entry Costs
Two advance payments, plus a small documentation
fee, are usually all it takes to lease. No down
payments are required.
- 100%
Financing & Fixed Monthly Payments
Your lease rate is fixed, even if the prime rate
goes up. Leases typically include taxes, freight,
delivery and installation. In addition to all this,
training and service contracts may be included as
well.
- Off
Balance Sheet Financing
Lease payments are generally treated as an expense,
rather than a liability. Important credit rates
are not impaired, preserving bank credit lines.
- Conserve
Working Capital
For other uses, like raw materials, labor or inventory.
Revenue from using equipment can more than cover
your lease payment.
- Tax
Advantages
Lease payments may be 100% tax deductible
- Avoid
the Risk of Obsolescence
As state-of-the-art continues to evolve exponentially,
with a lease, you're able to upgrade more easily.
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Save
Money with a Lease!
Example:
(Assuming an 18% tax bracket)
Equipment
Cost: $10,000.00
Lease Term:
60 months
Lease Rate:
.02435
"Pre-Tax" Monthly Payment:
$243.50
(Tax
advantage: Lease payments reduce your taxable income
since they may be expensed. In effect, the government
subsidizes your lease payment by 18%, or about $43.83
per month.)
"After
Tax" Monthly Payment:
$199.67
You
can take the money you would have spent on equipment
costs and invest in in a CD or even Mutual Funds,
and make back in interest nearly what you've spent
in lease payments.
Caveat:
The example is correct in theory, but only your accountant
can give you tax advice.
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