Eight out of every 10 companies in the United States lease some or all of their equipment. To determine if leasing is right for you, ask yourself:
* Should I spend the cash, or would it be better used elsewhere? Whether you purchase equipment outright or obtain a bank loan, you will need a substantial portion of your company's cash.
* What is the active life of the equipment? A lease can be structured to allow for upgrading your equipment without increasing your monthly cost.
* What can I afford? Receivables are constant and operators should know what each piece of equipment will yield. Lease or loan payments should reflect this.
* Do I need a structured payment plan? A lease payment schedule can be structured to allow for 90 days deferred or seasonal payments.
* Is the payment floating or fixed? Many bank loans have floating rates, while lease rates primarily are fixed. If interest rates are high, a floating rate may be more economical. However, if interest rates are low, it's best to lock in to a fixed payment.
* Can I afford a down payment? Leasing requires no down payment and offers flexible, extended terms.
* Does the lending source allow me to include soft costs (freight, supplies, training, etc.)?
* Is there a possibility that I will pay the loan/lease off early? A lease is a binding contract for the time stated and may carry a penalty for early payoff.