| LEASE |
BANK FINANCING |
| 1. |
Sales tax payable over term of lease |
1. |
Sales tax due up front |
| 2. |
Conserves valuable working
capital |
2. |
Short term money is not used
for long term purpose |
| 3. |
Conserves Cash 100% Financing (No Down
Payment) |
3. |
Twenty Percent (20%) down payment |
| 4. |
Fixed rate for life of lease |
4. |
Floating Interest Rate |
| 5. |
Keeps credit lines open |
5. |
Uses credit lines that could be utilized for
operations |
| 6. |
Transfers risk of equipment
obsolescence to lessor |
6. |
100% Obsolescence Risk |
| 7. |
Leasing can save you money |
7. |
May be more expensive than leasing |
| 8. |
Eliminate risk of Alternative
Minimum Tax |
8. |
Potential liability to
Alternative Minimum Tax |
| 9. |
Recorded off the company’s balance sheet. |
9. |
Booked on Balance Sheet |
| 10. |
Can be structured to
creatively fit your individual needs |
10. |
Inflexible |
| 11. |
Provides a quick and simple financing
transaction |
11. |
Normally requires more time and paperwork to
consummate |
| 12. |
Treat as expense and bypass
capital budget |
12. |
Unable to borrow as capital
outlay not budgeted |
| 13. |
Saves bank line for growing the business |
13. |
Uses bank line for depreciable assets |
| 14. |
Term of lease longer (6072
months) |
14. |
Term of loan short (1236 ) |
| 15. |
Expense lease payments |
15. |
Requires depreciating assets |
| 16. |
Asset can be upgraded easier |
16. |
Asset harder to dispose of |
| 17. |
Payments may be 100% tax deductible |
|
|
| 18. |
Pay with before tax dollars |
|
|
| 19. |
Finance soft costs: freight, warranties,
installation, etc. |
|
|
