Ownership

Equipment Leasing: May be structured so that at the end of the lease term the equipment can be purchased for $1, or for a prearranged residual, typically 10%, This choice if the lessee's. (Ownership does not produce income, use does).

Bank Loans: Ownership at the end with little or no choice as to structure.

Cash: Ownership occurs the moment cash changes hands. Cash flows from working capital into a depreciating asset that may negatively affect balance sheet and debt to income ratios.

Down Payment

Equipment Leasing: No down payment. Most standard leases let you get equipment on a 100% financing basis. None of the restrictions your bank might impose.

Bank Loans: 20% to 25% down, with balance from working capital. Possible compensating balance of 10% to 20% requested, thus adding to the cost of the loan.

Cash: 100% cash out of working capital.

Budget Projections

Equipment Leasing: Fixed rates. This allows you to plan ahead, month to month, year to year.

Bank Loans: Some rates (floating) may vary as much as 3% during term. This makes it difficult to budget for equipment in future projections.

Cash: Use of cash for equipment may restrict purchasing inventory as needed for growth of company.

Preservation of Credit

Equipment Leasing: Preserves borrowing capacity. With leasing, credit lines remain untouched and available to you when you need them.

Bank Loans: Existing credit line will be reduced by the amount of the loan. May negatively affect debt to net worth ratio.

Cash: Limits credit history when credit is needed for growth.

Why Lease?

Conserves Working Capital: low cash down payment required

Leasing is 100% Financing: no large deposits

Low Fixed Monthly Costs: fixed rates simplify budget forecasting

Bank Credit Lines Remain Intact: utilize third party funding source

A Hedge Against Inflation: pay for latest equipment with tomorrow’s cheaper dollars

New And Used Equipment Qualifies: select only what you want or need

Overcomes Budget Limitations: leasing finances the entire transaction

Possible Tax Advantages: there are a variety of tax benefits with leasing  (consult your accountant)

End Of Term Options: options to renew the lease, to not renew the lease, or to purchase the equipment

Flexibility: numerous terms and programs available

Contact CSS Sales for further information on our leasing options.