Equipment Leasing- Benefits And Pitfalls

by Shilpi Sharma - Date: 2010-10-13 - Word Count: 375 Share This!

Talk of business growth and profits, the two most essential elements that come into picture are equipment leasing and equipment finance. There is universal need of getting equipment on lease or get a financial solution for starting, building or acquiring a business. But there is very limited understanding of how the process of getting a suitable lease program among the business owners.

Equipment Leasing is the best choice for business financing. It is the largest type of asset based lending and is steadily on the rise. Everything from computers and office furniture, to heavy duty equipment and farm equipment can be eligible for lease financing. The business of leasing is generally focused on special type of assets.

The basic of it lies in simplicity- Lessor purchases an asset and provides the asset to the Lessee for business. This is done in exchange for lease payments. Here, instead of making a principle and interest payment, you make a lease payment. A lease quote is a form of financing. The main benefits of it are as follows:

You do not have to extend additional capital.
Turns equity into reusable capital.
Process can be completed in a single day also.
Vendors work with onsite programs to accelerate the closing of the sales process.
You are able to get finance a larger percentage of the asset purchase in bad credit situations too.
It reduces the amount of monthly debt servicing.
The initial cash down payment is lower as compared to purchase.
Business owners are able to the generate working capital necessary to keep their business operate and grow.
Allow the Lessee to turn back the equipment for disposal or resale to company or in some cases for extension of lease too.
Potentially reduce the amount of business tax.
Offers flexibility to your needs and business.

Equipment Leasing has certain pitfalls to avoid also like:

Surprise end- term: Avoid getting caught short-handed. Before you sign a contract, understand what you will own and what you will owe at the end of your lease.
Insurance policy- In case you do not have insurance, most leasing companies will add the cost of coverage to your invoice or might add insurance to your quote.
Sales Tax- Know how taxes are interpreted in your state and look for efficient way to minimize these expenses.

Ask questions and read your contract thoroughly.

Related Tags: equipment leasing, used medical equipments, heavy equipment lease, dental equipment leasing

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