On 11.11.09, In Leasing Articles, by Celso
About 30% of all new business investment equipment is financed through leases in the United States (this number has hardly varied in 10 years), with 80% of U.S. companies leasing all or some of their equipment.
A recent study examining why companies lease showed the following percentages:
- 35% chose leasing for cash flow reasons.
- 17% chose for the dollar value.
- 13% chose for the ease and convenience.
- 13% chose for the maintenance options.
- 13% chose for tax benefits.
- 9% chose for the ability to get latest technology and be able to transfer the cost of upgrading to the lessor.
So we can summarize this data in three main categories and look at a little further to understand the advantages leasing can present to you business:
- Cash flow and financial reasons. Leasing enables rental payments to be closely matched to the income produced by the leased equipment.
- Efficiency and convenience. Businesses have come to recognize the value of equipment in its use, not its ownership. They make money by using equipment – ownership being incidental depending on business factors. Additionally, leasing companies offer many services (like acquisition, disposition, maintenance, and upgrading) related to equipment that permit a company to keep its focus on its central business activities, not on dealing with its equipment. Leasing is also especially efficient for certain industries as it protects against technological obsolescence.
- Stimulating investment and serving growth. Federal and state tax laws give incentives to companies to invest in new equipment, but often companies could not take advantage of these incentives if burdened by the expense of new purchases. With leasing, however, depreciation or credit incentives can be used by a leasing company who then passes them on to the lessee in the form of low rental payments.