Understanding The Leasing Advantage

  A major benefit of leasing is its ability to conserve capital. 

Rather than an immediate depletion in capital dollars to fund 

equipment acquisitions, leasing preserves capital to fund 

other profitable activities.

This is why the outright cost of leasing is often misperceived. 

The temptation is to compare costs in absolute dollars against 

conventional financing. But this does not take into account 

leasing options which may eliminate the need for deposits, 

down payments or compensating balances. Also, many other 

cost factors such as installation, freight, training and service 

can be incorporated into lease programs. Typically, lease 

terms can be set for a longer time period than a standard

loan thus lowering payments to further improve cash flow. 

Leasing also provides certain tax advantages that again 

preserve the capital an organization requires to maximize 

its technology needs.

Technology does not stand still. Equipment can become 

obsolete even before it can be paid for or fully depreciated.

Management must plan for ongoing investments in technology. 

Leasing is an important strategy in leveraging the reality of 

obsolescence. Lease terms can be matched to the practical life 

of the technology... or even accommodate ongoing upgrades or 

replacements. 

Leasing is a prospective process that continues to deliver new 

and improved technology into the future. 

Leasing represents one of the most affordable and flexible way

to obtain – and maintain – the latest and most effective levels of 

medical technology necessary for optimum performance and

patient care.

 Leasing enhances profits by making conserved 

capital available for investments yielding higher 

returns. It improves cash flow and contributes to 

a healthier bottom line.

Profits are generated indirectly through pre-served 

capital because working capital is available to take 

advantage of alternative investments, prompt 

payment discounts and other incentives. 

Time is the critical factor. Money invested wisely today

can continue to increase in value. Money invested 

tomorrow may forfeit potential returns.ones.

Credit standing is the measure of an 

institution‘s financial reputation and borrowing 

power. It is a resource that must be managed as

wisely as cash. Credit is not unlimited.

In times of high demand on capital, credit is tight. 

This reality competes against the need to achieve 

and sustain appropriate levels of technology. 

Leasing has advantages even in difficult economic 

times. As an alternative form of financing: 

§Leasing means equipment needs can be  

met without depleting traditional sources of credit.

§Not only capital, but credit, will be available for  

unexpected, short-term or seasonal requirements.

The only thing low inflation promises is high 

inflation later. Inflation must be factored into 

any long-term equipment financing decision. 

In theory, the original capital outlay for technology 

is recovered through depreciation over time. Since

time erodes the value of money – at rates compounded 

during periods of higher inflation – dollars recovered 

through depreciation decline in value. Leasing can be 

an effective hedge against inflation. Equipment acquired 

today is paid for with tomorrow’s cheaper dollars.yourself, let folks know.

 In today’s competitive environment the 

decision whether to lease or purchase

equipment is a major and sometimes 

complex issue. 

On the surface, the answer may seem simple 

enough. On a pre-tax basis, a direct purchase 

may be less than the total cost of the lease.

However, the impact of time and taxes are

ever-present factors that need to be incorporated

in any comparison of these two dissimilar 

methods of equipment acquisition. 

So which approach is better and how can 

these two dissimilar methods be compared? 

As the present value lease versus buy model

illustrates, the after-tax story may show a big 

difference between the two methods. Direct purchase

makes use of expensive after - tax dollars and the 

cost of equipment is recovered through depreciation 

over the life of the asset.