There are several good reasons to lease rather than buy. Here are our top three:
1. Tax benefits
- Lease payments can be expensed rather than depreciated as a capital cost.
- When you lease equipment the outstanding debt doesn’t appear on your Balance Sheet so it doesn’t affect the Debt to Equity ratio of your business.
2. Keep your cash in your pocket
- Leasing means you don’t touch your reserves of cash, or your credit line, so they’ll be there when you need them for an emergency or an opportunity.
- No deposit. Your first payment is applied to the balance when the lease Is signed, not like financing through a lender which could typically require a 25% down payment.
3. Transfer wealth to family members
- When the lease ends the equipment can be purchased for 10% of the original value. Family members are welcome to take this purchase option.