Each year companies and individuals ask the question “Why Lease”? For some, leasing has clear cut advantages over the purchase of equipment; for others the final answer may be more difficult. Below we have outlined a few of the most compelling reasons why companies today should take advantage of leasing when replacing or adding new equipment.
LOWER LEVEL DECISION MAKER
Managers of all levels who wish to acquire the use of equipment, but who do not have the appropriate authority to expend the necessary level of funds, find leasing to be a convenient method of acquiring additional equipment. Through the use of a lease, companies are able to pay monthly lease rentals out of the department or division’s operating budget because the amount of the monthly lease payment often falls within their spending authority guidelines. At WBLS, we find that when given the lease option, managers and directors are able to move forward with replacements without using the companies’ capital funds, saving time and money.
AFFORDABILITY TO LESSEES
Incidental costs of acquiring the asset, such as installation and transportation charges, can be included as part of the lease payment itself, rather than being paid in advance with a large down payment as is the case in most purchase situations. Obviously, in a credit tight economy, not tying up cash in large down payments and other incidental costs allows a company to employ cash savings for other more profitable working capital requirements.
CIRCUMVENTING CAPITAL BUDGET CONSTRAINTS
Many large and profitable firms choose to lease for one very important reason – to circumvent various capital budget constraints. By leasing the equipment, companies can use the money saved on fuel and maintenance to help pay for the equipment and in addition they avoid costly down time.
MINIMIZES OBSOLESCENCE CONCERNS
When A user is concerned that a piece of equipment may become obsolete before the end of its useful life, and , therefore, have little or no resale value, leasing can reduce that concern if the lessor assumes an obsolescence risk by basing part of its investment return on a significant end of lease equipment sale or release.
IDEAL WHEN THERE IS LIMITED USE NEEDS
If equipment is only needed for a short period of time, leasing can be a way of getting the use of the equipment without the concern of remarketing the piece when it is no longer needed.
Some users find that conserving their capital or bank lines for other purposes can be an advantage. Low first payment requirements leave cash available for other things.
“I have Leased from West Bay Leasing Services, LLC for the last 2 1/2 years and each time has been as pleasant as the time before. I have Leased trucks and each time the process went smoothly, the cost was within reason and the staff always went out of their way to help me.”