Leasing can provide Tax Advantages. A lease, like your telephone, is an operating expense; therefore, it may be 100% expensive and does not require complicated C.C.A. (depreciation) schedules. This allows the equipment to be written off sooner, avoiding obsolescence, saving time and money. In comparison, a bank loan or paying cash only allows the interest and depreciation to be written off over a much longer period.
The Entire Cost of the Equipment Can be Financed on a lease. Get the equipment working for you immediately without having to arrange large down payments and receivables/inventory as security.
Upgrades are Easy because you can modify existing equipment leasing, replace older equipment, or add new equipment anytime during the lease. Leasing keeps you more progressive and profitable because the equipment is always “State-of-the-art” and more productive. Obsolescence is avoided.
Defer Paying the GST and PST by paying these taxes only as you use the equipment. A larger bank loan to cover the taxes upfront may cause you to compromise on equipment that is less than adequate. The increased loan further restricts your borrowing capacity.
Because a lease is not a loan, it Preserves Your Lines of Credit for more appropriate uses such as day-to-day operating expenses. Bank loans reduce your lines of credit, placing you at risk should unforeseen expenses arise or when economic slowdowns occur.
Lease Payments are Fixed for the entire term making budgeting and accounting more manageable. With a loan, variable rates constantly fluctuate, making it harder to forecast costs and offering no protection from rising interest rates.