Being aware of the distinction between open and closed leasing agreements can be an important thing to know when preparing to lease equipment for your business.
For any prospective lessee who has asked the question, “what is an open end lease and closed end lease?”, some additional information on the subject will now be provided.
While leasing in any form is typically going to be a smarter business maneuver than cash purchasing commercial equipment items, it does help to know about the different types of leasing agreements in order to find the leasing agreement that is precisely suited to your needs.
What is an Open End Lease and Closed?
While an open end lease is set up so that the risk is largely associated with the lessee, a closed end lease is generally situated as to have the risk be assumed by the leasing company.
The risk in this case is really referring to the potential for commercial equipment items to depreciate in value over the course of a leasing term; in an open end lease, a lessee stands to be obligated to cover the potential costs of product value depreciation.
With a closed end lease, the leasing company will be obligated to take on the expense of potential disparity in a commercial equipment item’s value.
Even though it may seem like having an open end lease would not be preferable, it actually can be a great choice for businesses because even if a business ends up having to cover the depreciation value of a commercial equipment item, it is very likely that they will be able to deduct this value from their taxes and mitigate the expense.
With a closed leasing agreement, a lessee will have the option of simply returning the commercial equipment items at the end of the leasing term, which may be a preferred option for some lessees.
Different Businesses That Benefit From Open and Closed Leasing Agreements
Regardless of the specific business type that is interested in leasing, there is an incredibly broad range of equipment leasing options available to businesses today. Leasing through LeaseQ.com and other online leasing outlets similar to it has become the preferred acquisition method for so many different business niches in recent years for its convenience and stress free process.
Whether your business is in the restaurant industry, construction, the medical or dental fields, or fitness and gym related business niches, entering into an open or closed leasing agreement can truly provide your business with an acquisition method that will not only keep capital reserves at healthy levels, but it will also keep your business’s monthly costs low and manageable.
Various Financing Options for Open and Closed Leasing Agreements
One of the most important financing option facing prospective commercial equipment lessees, regardless of whether it is an open or closed lease, is the prospect of taking out loans.
Whether or not a client needs loans to make their lease payments, leasing is virtually always going to be the more financially advantageous route to take as opposed to cash purchase acquisition.
To learn more about the extensive benefits of leasing, simply CLICK HERE for a free quote.