Advantages and Disadvantages of Leasing Equipment
One way in which an uninformed leasing client could potentially suffer from a disadvantage of leasing equipment is in a case where the client has failed to adequately establish a financing plan for the equipment items that he or she has leased. Failure to adequately finance your leasing agreement could lead to a situation in which your business may be forced to make late or insufficient lease payments, which could result in fines or other kinds of potential penalties for the leasing client.
One major advantage associated with leasing your equipment items is that you will have the ability to pay for your equipment items over time instead of paying for them all at once as would be the case with a cash purchase. A main reason that cash purchasing can put a business in a position of serious risk is that a cash purchase can end up severely depleting the reserves of capital that a business can come to depend on in times of tough financial circumstances or general economic sluggishness.
Another advantage of leasing your equipment items is that you will have an array of options pertaining to the end of lease conditions that you will be able to customize and specialize for your own individual leasing agreement. An option that some lessees end up choosing is the one dollar buyout option, which ends up giving lessees the ability to keep their equipment items at the end of a lease for a final buyout payment. Another option is to return the equipment items at the end of the lease, which some businesses will prefer.
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