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Numerous forms of equipment leases
available
There are numerous forms of equipment leases available and it is vital
that you
know the difference between them. The kind of lease you choose depends
on several
facts. The type of equipment you want to lease. Exactly what benefits
you want
out of your lease. Finally, what you have in mind for your long-term
goals. It
is essential you review the terms of the lease and understand them fully
before
agreeing to or signing anything paperwork. This rule applies to any type
of equipment
leasing program.
Operating Lease:
This is the most common form of equipment leases. The main advantage
operating
leases are they usually have lower payments. With these leases, the
equipment belongs
to the leasing company and there is no predetermined buyout. The
payments are calculated
as an operating expense. This form of lease is perfect for equipment
that quickly
depreciates, such as computers, and office equipment, or for seasonal
equipment.
Financing leases:
With this form of equipment leases, there is an assumption of a buyout.
Your payments
are the purchase price plus interest over the term of the agreement. At
the term
of the agreement, a price is paid to acquire ownership. This form of
lease would
be advisable on heavy equipment, which you would use continuously and on
items that
hold their value.
Sale-leaseback:
This form of leasing agreement may sound complicated at first, but is
quite simple
to understand. Sale-leaseback is when a business purchases equipment,
then either
needs to or wished to lease that same equipment. The equipment is sold
to a leasing
company, which in turn, leases it back to the business they have
purchased it.
This allows that business to put the money back into their budget while
still having
the use of the needed equipment.
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