Lease Vs Purchase : Lease Versus Purchase Equipment

Satisfactory Essays
Lease versus Purchase
When a company decides to expand its operation, often the organization may face the dilemma to lease or purchase equipment. The pros and cons of both options will aid management to determine the best decision that will benefit the company. Management can recapitulate the best option for the company. Time value is another aspect management must determine. Therefore, understanding the aspect of lease versus purchase equipment is essential during decision-making when adding equipment to the company’s operation.
Factors involved in making a lease
Before the company makes its final decision to lease instead of purchase the equipment, reviewing and understanding the following factors are important.
Factors in making a lease include, but are not limited to:
• Leases do not require as much money down as purchasing; usually require the first month’s rent and deposit.
• Repairs are not the responsibility of the company, but rather the owner of the property. Leasing also allows the company to free up money spent on maintaining the building except for utilities.
• Leasing the property gives the flexibility of expanding to a larger facility if necessary without securing additional funds in the moving process. A company can simply try a building for a certain length of time to decide the suitability. However, the risk of selling the building and forcing the company to move unexpectedly is an important consideration.
• There are tax breaks for the rent paid
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