Why Businesses Lease--14 Reasons
1. It allows for better cash management of working capital--the number one reason!
2. It provides a hedge against technological obsolescence (the number two reason).
3. It can provide 100% financing, i.e., no down payment is required. It also requires payment for only the value of the property's use when the value of ownership is not needed.
4. It provides a fixed payment.
5. It is a flexible form of financing.
6. It provides a hedge against inflation.
7. It allows better utilization of tax benefits by both lessor and lessee.
8. It conserves credit lines.
9. It expands credit sources.
10. It diversifies credit sources.
11. It may provide off-balance sheet financing.
12. The lessor may provide non-financial services not readily available from other credit sources, such as equipment service and maintenance.
13. The lessee may be able to take advantage of the economies of scale of the lessor's purchasing power.
14. It may better accommodate capital budgets than alternative financing.
Article by Steven Gilyeart.
Updated 6 March 1998
