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Costados KnowledgeBase: Benefits of Terminal Leasing

Leasing offers some advantages over purchase financing:

  • Balance sheet management: An operating lease is not considered a long-term debt or liability, so it does not appear as a debt on your financial statements, thus making you more attractive to lenders when you need them.

  • With leasing, there is very little money down: Perhaps only the first and last month's payment are due at the time of the lease. Since a lease requires a very small up-front payment, it means that you will have more money to invest in other revenue generating activities.

  • Write-off of expenses: Leasing payments are treated as expenses on a company's balance sheet, therefore, equipment does not have to be depreciated over five to seven years.

  • Flexibility: As your business grows and your needs change, you can add or upgrade at any point during the lease term. If you anticipate growth, be sure to negotiate that option when you structure your lease program. You also have the option to include installation, maintenance and other services, if needed.

  • Customized solutions: A variety of leasing products are available, allowing you to tailor a program to fit your month-to-month cash needs. You can customize a program to address your needs and requirements. Some leases allow you, for example, to miss one or more payments without penalty, important for seasonal businesses.

  • Asset management: A lease provides the use of equipment for specific periods of time at fixed payments. The lease company assumes and manages the risk of equipment ownership.

  • Upgraded technology: If the nature of your industry demands that you have the latest technology, a short-term operating lease can help you get the equipment quickly and keep your up-front cash. Your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to meet your changing needs.

  • Speed: Many leasing companies can approve your application within one or two days and you can have your equipment very quickly.

  • Improved forecasting: By leasing equipment you know the amount and number of lease payments over the life of the leasing period, so you can accurately forecast cash requirements for your equipment.

  • Flexible end of term options: There are several options for disposing of equipment after the lease term ends, including returning the equipment, renewing the lease, or purchasing the equipment.

  • Tax benefits: Lease companies often pass the tax benefits of ownership on to the merchant in the form of lower monthly payments.