LEASE vs LOAN vs CASH

Use leasing to acquire assets that depreciate, especially when the advantages of using the asset outweigh the low monthly cost. This will free your cash to use on advertising, personnel, inventory, and other needs. It also keeps your cash and bank lines available for unforeseen opportunities that may arise.

CASH FLOW
CREDIT LINES
RATE RISK
SOFT COSTS
UPGRADES

LEASE

Zero money down. Equipment can be profitable from day one.
Preserve bank lines and conserves capital. Creates new credit source.
Provides a monthly payment that doesn’t change.
Leasing includes soft costs such as installation, insurance and maintenance.
Easy add-on or trade-up.

BANK LOAN

Requires down payment. Installation, maintenance, freight not included.
Ties up credit lines.
Potentially a variable interest rate tied to prime or another economic indicator.
Rarely covered.
Upgrade requires a new purchase. Disposal is owner’s responsibility.

CASH PURCHASE

Depletes your cash cushion. Reduces ability to respond to unforseen expenditures.
Working capital is diminished and may affect credit.
Use today’s cash for income generating activities.
Paying for soft costs up front depletes cash reserves.
Upgrade requires a new purchase. Disposal is owner’s responsibility.

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