Young says companies acquire equipment under lease arrangements for four primary reasons: Leasing can reduce up-front cash expenditures, improve the company's tax picture, reduce assets on balance sheets and manage the risk involved with the purchase.
"Those are the primary drivers, along with pure convenience," says Young.
Leasing is especially convenient when a company needs the equipment immediately.
But what is the best option for your company, purchasing or leasing? Young says the first rule is to know the asset and get as much information as possible.
"Know your objectives regarding the acquisition," Young says. "And be able to explain them to your lessor."
There are numerous types of purchase/lease agreements; which type is right for you depends on many factors. There are specific types of leases for transportation equipment, aircraft and construction equipment, as well as computers, barges and mining equipment. Each has its own set of accounting and tax implications that you should know about before signing.
Young advises companies to go to an expert, experienced lender before making a decision.
"Get someone to help you analyze your situation," says Young. "Someone who can understand what you are trying to accomplish and make the best recommendation to get you there."
The bottom line, says Young, is to know the equipment you are acquiring and what you want to do with it, and talk with someone knowledgeable to understand the value of each type of lease arrangement.
"Talking with someone you trust that has the expertise you need is important," says Young. How to reach: Bank One Leasing Corp., (614) 213-6995