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Listed below are the factors to consider when comparing leasing versus
purchasing equipment and machinery.
Only those factors that would differ between the ownership and lease of
equipment would be considered. For example, fuel costs would be the same, so it
is not included in the cost comparison.
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Is it Better to Lease or Buy?
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| Item |
Buy |
Lease |
| Repairs (cash flow&economic) |
yes |
no |
| Down Payment (cash flow) |
yes |
no |
| Up Front Charges (cash flow) |
no |
yes |
| Loan Payments (cash flow) |
yes |
no |
| Lease Payments (cash flow&economic) |
no |
yes |
| Tax Depreciation (neither) |
yes |
no |
| Tax Reduction (cash flow&economic) |
yes |
yes |
| Lease Penalty Expenses (cash flow) |
yes |
yes |
| Functional Depreciation (economic) |
yes |
no |
| Interest Cost On Investment (economic) |
yes |
no |
| Salvage Value (cash flow) |
yes |
no |
Source: The University of Tennessee Institute of Agriculture.
Answer: Considering all the factors in the chart above, it is typically a
smarter decision for drivers with credit issues or who have a medium to low cash
flow to elect a lease-to-purchase program as a way to truck ownership.
Because everyone’s situation is unique, when you call, we can guide you through
the process, and discuss how leasing versus buying makes sense for your specific
situation.
For a detailed example, click here.
Call us today at 816-690-8643 for our experienced and friendly advice.
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