Lease Vs. Buy Decisions Don’t Have To Be A ‘ Hair Raising’ Question or Challenge Lease Vs Buy

OVERVIEW – Information on how business owners and managers can address the lease versus buy question when addressing equipment finance and general financing needs for asset acquisition

Equipment finance poses an interesting and challenging question for Canadian business owners and financial managers. That question? Should we lease or buy the asset in question. Or should we care ? ( Answer – you should ) . Whether it’s a one time asset acquisition or if you company is somewhat ‘ asset intensive ‘ there are numerous ‘ repercussions’ (both positive and negative) around addressing that question properly .Let’s dig in.

It’s should be no secret that the lease industry touts the many advantages of equipment financing as beneficial to your business. Those benefits are real, but even more real is the fact that every company is somewhat different relative to its own needs and any peculiarities surrounding their business or industry.

What then are some of the key factors around your choice to finance, or buy an asset or technology? (Yes Virginia, your tech needs can be financed!)
And by the way, we’re not trying to complicate the decision, but other alternatives to leasing do exist – including term loans, sale leasebacks of owned assets, and temporary bridge loans.

Back to the ‘ lease vs. buy ‘ decision though at the heart of that decision almost always is some cash flow analysis.It’s really the ‘ timing’ of monthly payments and cash outflow that brings many owners to the decision to opt in favor of leasing. Some of those other issues that should be taken into consideration include tax issues that might well be discussed with your accountant.

In our own experience clients tend to consider balance sheet and, tax, depreciation and other issues in favor of… you guessed it… interest rate! If only we had a dollar for every time someone asked us ‘ what’s my rate ‘……

In some ways, primarily because the industry is very competitive and overall credit quality drives rate it’s really the least important issue in lease finance!

What are some key data points in managing your overall decision to purchase or lease an asset? They will include:

How the equipment will be used and maintained?

Is it advantageous to my business to include other miscellaneous costs tied to the acquisition in the financing – delivery, installation, service, etc?

Do I have ‘ wiggle room ‘ in getting out of a lease early (Answer – basically you do not!)

How can upgrades or add ons to the asset/assets in question be handled?

If you’re looking for expert assistance in the lease versus buy conundrum seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in ‘ declassifying ‘ data into asset acquisition financing that makes sense .


Author Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN EQUIPMENT FINANCE EXPERTISE

 

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