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Leasing is Actually Cheaper
Than Paying Cash

                                   

Whenever the actual tax benefits of leasing equipment are combined with the conservation of capital which leasing provides... and to that amount, add the potential income that will be derived from the conserved capital... then without a doubt, leasing is definitely the cheaper method. This is fully demonstrated with the following example.

Cash Outlay
Buying Equipment Leasing Equipment
Cost of Equipment $20,000 Total Lease Payments
$405.71 X 60 Months
$24,343
    Plus 10% Buy Out $2,000
    Total Amount $26,343
Cash Inflow
Buying Equipment Leasing Equipment
Tax Savings...
Using a 179 Deduction
$20,000 Tax Savings...
Total Amount Paid
$26,343
Times Tax Rate 31% Times Tax Rate 31%
Equals $6,200 Equals $8,166
Net Cost to Own Equipment
Buying Equipment Leasing Equipment
Purchase Price... $20,000 Total Lease Cost... $26,343
Less Tax Savings $6,200 Less Tax Savings $8,166
Less Interest Earned 0 Less Interest Earned
(6% Compounded Monthly)
$6,977
Net Cost $13,800 Net Cost $11,200
Total Assets Owned
Buying Equipment Leasing Equipment
Equipment Only Equipment
Plus a Certificate of Deposit

The above example clearly demonstrates that when a company fully utilizes leasing as a financial tool of leverage (while taking full advantage of the tax benefits that leasing provides) the actual overall cost of equipment will be considerably lower. As you can easily see in this example, by leasing the equipment this company saved $2,600.

Please Note: All tax related business decisions should be discussed with your tax advisor.



Home  |   Lease/Finance  |   New Businesses  |   Lease & Save  |   Equipment Types  |   Submit Application
Site Map  |   Equipment Links  |   Vendor Services  |   Broker Resources  |   Off-Lease Equipment  |   Contact Us
Disclaimer  |   10 Engine Speed Search
Louisiana Home Loans and Mortgage Services