We recently published an article to explain what is meant by the terms ‘Leasing’ and Hire Purchase if you haven’t already read this article and would like to, you can find it here [link to article]. If you are thinking about the notion of Leasing or Hire Purchase and would like to find out more about the benefits of leasing, then we hope this article will help. Here are what we believe to be the 8 Major Benefits of Leasing:
1. It means you can hold on to your cash.
In the current economic climate, Cash is King and finding any way you can to hold on to your hard-earned cash is worth its weight in gold. Leasing vehicles, equipment and technology means that you can keep your cash safely in the bank and not tie it up in depreciating assets by making capital investments.
2. It gives you the chance to save tax.
When you lease an item, you become obliged to pay the lease, which is deemed to be an expense against your business. What this means is that by doing so, you are reducing your taxable income.
3. It eases up your cash flow.
When you lease, rather than purchase a piece of equipment or a vehicle, you safeguard your cash by avoiding having to make a hefty up front payment. Only when payments become due each month do you have to find the cash to make them.
4. It enables you to access up to date equipment.
When you buy a piece of equipment or a vehicle, it will have an anticipated useful lifespan. At the end of this lifespan, you will need to find the money to replace it in order to keep your fleet or equipment up to date. This is not the case with leasing. With leasing, you will be able to negotiate the period of the lease so that once the item becomes obsolete you will be able to replace it with a new, up to date alternative by setting up a new arrangement.
5. It enables you to retain your credit rating.
It is essential in business to keep your credit line healthy and open. Because of the way leasing arrangements are organised, they allow you to hold on to your capital, retain your borrowing rights, reduce your taxable income and manage your monthly payments all in one go. All of this helps you retain your credit facilities so you can draw on lines of credit should you need to.
6. It keeps your balance sheet in tip-top shape.
Once again, because your monthly leasing payment is treated as a business expense, rather than a debt, this makes for a healthier balance sheet. The less debt you have on your balance sheet, the healthier it is perceived to be by lenders or potential buyers.
7. It provides you with the opportunity to seize opportunities.
When you choose leasing, it leaves you with your capital and lending opportunities in tact. What this means is that when opportunities come along that you need investment to respond to, that investment is available and not tied up in vehicles or equipment.
8. It promises flexibility.
Leasing allows you to take equipment or vehicles on a term that suits you and your business needs. If you need a short-term arrangement, it’s possible and if you need long-term, that option is there too. If you choose to purchase the items you could otherwise lease, then you could find yourself stuck with them when you no longer need them.
Leasing can work equally well for businesses and individuals. If you’d like to discuss the options that may be open to you, why not get in touch?