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Tag: SAP for small business

What Is Equipment Leasing?

Equipment leasing is using machinery, vehicles or other equipment on rent basis. This is done in order to avoid capital investment in equipment. The ownership of equipment is in the hands of the financial institution or leasing company. There are many business owners that consider SAP for small business.

In order to lower down the cost of equipment, leasing is better than buying. Nowadays it is possible to lease everything starting from computers and heavy machinery to complete offices.

The kind of business and type of equipment looking for you will greatly determine whether to lease or buy.

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Suppose you are starting some new business and you need only a single computer then buying it will be much better. In case you are opening an office where several employees will be working then you can look into leasing.  

According to the reports provided by the Equipment Leasing Association of America, there is over 80 percent of companies in the US that lease equipment.

The benefit of leasing are:

  • The monthly payments that you make are lower in case of lease then loan.
  • Here you get fixed financing rate
  • In leasing, you get tax advantages
  • Best way to conserve work capital
  • Here cash-devouring down payments can be easily avoided
  • You get immediate access to up-to-date business tools
  • It is very important to study lease agreement as lease decision are unique. You can compare the cost of leasing with the current interest rate to determine whether the terms are favorable.

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It is necessary to find an answer to questions such as:

What does lease cost?

What is your saving?

You can compare the cost of leasing with the purchase cost of the same equipment to check which one is more profitable.  For startup companies, it is difficult to lease the equipment as they have little or no credit history. But there are some companies that consider personal rather than business credit history during the approval process.

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