Equipment Leasing vs. Bank Loans

It is important to understand the differences between leasing and bank loans.

We are determined to work with you to find the best option for the needs of your business because, at Lease 1 Financial, our ultimate goal is to help your business thrive!

Leasing

  • Predictability & Security: Leasing provides the predictability and security of low fixed payments, making monthly expense planning and budgeting simple.
  • Maintain Cash Flow: Leasing can offer flexible terms and programs to meet your cash flow needs.
  • No Down Payment: In most cases, a lease does not require a down payment and all that’s needed to secure a lease transaction is the leased equipment itself.
  • Tax Advantages: Lease payments can be treated as a business expense which allows you a tax deduction each year of your lease term. Consult with your accountant.

Bank Loans

Bank loans, on the other hand, do not offer the security, affordability, flexibility, and tax benefits provided by a lease.

  • Unpredictable, Fluctuating Rates: Rates offered by banks are constantly fluctuating. This makes bank loans less predictable. Banks often charge fees and may require floating rates for loans.
  • Credit Exposure & Limited Working Capital: An equipment loan with a bank will affect your credit exposure and may limit your working capital or other funding options you might require.
  • Regular Financial Statements: In many cases, a bank will require quarterly, or even monthly, submission of your financial statements throughout the duration of your loan.
  • Less Flexibility: Banks tend to be less flexible in the structuring of financing programs and payment schedules.
  • Higher Collateral: A loan with the bank often requires other assets or a General Security Agreement as collateral.

See Also:

5 Advantages of Leasing

6 Objections to Leasing & Why You Might Want To ReThink Them

5 Common Reasons to Lease

Contact Lease 1 Financial today to find out if leasing is the best option for you!

 

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