Advantages and Disadvantages of Financing Equipment’s
Posted on 30. Jun, 2014 by Author037 in General
Are you searching for a well-tuned financing alternative? Equipment leasing is one such alternative but it also has some advantages and disadvantages.
Disadvantages
Drawback of leasing is that there will be different expenditures in the functioning of the equipment and its maintenance during the course of your leasing. But the irony is you will not become the owner of that even if you are paying for the same. By using the equipment leasing facility you can make payments on monthly basis or as per your ability to use it nonetheless you will never own the equipment’s.
Leasing is considered as costly in comparison with purchasing. This can be an issue but you do not need financing to acquire these equipment’s and use them as per your requirements. Suppose you are leasing equipment’s for a span of three years and if you purchasing the same equipment’s, they may cost you around 1000 dollars. But you are making monthly payment of only 50 dollars, by, which you will end up in paying more amount.
Getting loan from bank is long and cumbersome process, which needs a lot of documentation and other terms and conditions to follow. Generally the credit unions put their emphasis on the bank statements that shows their credit records of the previous years. But on financing equipment’s you are free from such procedures to follow.
Another important advantage of taking the services of leasing company is if, you don’t have capital to invest at the starting of your business. You don’t have to worry to arrange the capital investment. Leasing the equipment’s will cost you less amount of money.
In comparison to the large assets acquisition, you are paying little amount, which is required to perform your daily activities. You are not paying for the assets, which you have taken of lease.
Advantages
Leasing equipment’s can also affect the taxes and you have to avoid the buying of the equipment’s. You have to lessen the amount of property on your balance sheet. You can also decrease depreciation expenses. Equipment leasing is considered as an expense but your balance sheet will not show any kind of acquisitions of assets.
When we talk about technology equipment’s and other hi-tech machines to use their market value drops very quickly. The majority of the assets, which you have acquired, may become worthless after a couple of years. Technology is evolving and it may cost you dearly to purchase new equipment’s on regular basis as they become aged and inefficient after few years of buying.
Telecommunication equipment’s help us to manage our business operations effectively. That is the reason why most of the business houses are functioning without any kind of communication gap. This has increased their development rate in manifolds. However purchasing these costly and hi-tech equipment’s is practically impossible for small and medium companies.
Computer hardware is an essential part for every company irrespective of the fact in, which field they are functioning. They need data storage equipment’s, server, network and other hardware as well. leasing company provides every kind of equipment for the use of business houses.