Leasing vs
Buying Equipment

Leasing can be a cost-effective alternative to purchasing new equipment. It is particularly efficient for expanding organizations encountering cash flow concerns.


Overcome Budget Restrictions

When new equipment is needed to improve business operations, postponing the acquisition of better equipment due to budget restrictions might actually cost you more in the long run. When you factor in lower productivity rates, lost revenues, and higher maintenance bills–waiting to save enough surplus cash to purchase new may not be the optimal choice. Leasing provides quality equipment at cost-effective rates, preventing detrimental losses on substandard equipment.

Conserve Operating Capital

Organizations that choose to lease are actively conserving capital. This opens up the possibility to invest in future opportunities that may grow the organization, increasing revenues and profits. When organizations lease equipment, their cash reserves and credit lines aren’t tied up in a depreciating asset so those funds can be used in more beneficial ways. For instance, with the conservation of capital, investing in other areas of business becomes possible when you can avoid unexpected financial emergencies.

Cost-Justified Leasing

When leasing equipment, you are spending less money while still reaping the financial benefits of productivity—the profits outweigh the spending. This process is called cost-justified leasing. In turn, any new equipment needed basically pays for itself through the profits made from cost-effective leasing. Both leasing and buying can work together resulting in optimal financial gain and efficiency.

Take Advantage of Inflation

With the option of leasing, there is no need to worry about a fluctuation in the pricing of equipment due to inflation. Save the purchasing power of your dollars and lease with a fixed rate. The fixed payments of a lease are paid with tomorrow’s less valuable dollars, effectively lowering the cost for leased equipment as time progresses.

A capital purchase requires depreciation schedules and capital cost allowance calculations, making it more difficult to assign costs for equipment. A lease has predetermined future payments that can easily be allocated as a direct expense. Budgeting and forecasting are also less complicated when equipment is leased.

Reduce Taxes

Leasing may categorize under allowable business expenses. This can offset revenues and lower an organization’s taxable income, making it possible to invest in new equipment with pre-tax dollars. Leasing may also offer additional write-offs permitted under the Capital Cost Allowance guidelines. 

Star Diamond Tools is an EDCO Dealer