Why Would Companies Choose to Lease Rather Than Buy a Copier?
Leasing a copier offers many advantages, such as:
- Easier Budgeting
You know how much you will be paying each month.
- Tax Efficient
If you pay corporation tax, copier lease payments may be deducted from taxable profits, which reduces the net cost of leasing the equipment.
Making copier lease payments by direct debit helps you avoid unnecessary time organizing payment for equipment rental invoices.
- Conservation of Capital
Your money is not tied up in equipment costs and can be invested in other ways.
- Obsolete Protection
When it’s time for your lease to expire, you may choose to keep your equipment or upgrade to new equipment.
There are two (2) types of leasing option:
- Fair Market Value (FMV) lease
- $1 Buyout Lease
To make the best decision for a leasing option for you or your company, here is what you need to know:
Fair Market Value Lease
A Fair Market Value lease, also known as an operating lease, allows you, the lessee to use the equipment for a pre-arranged time period for a fixed monthly payment. At the end of the lease term, you have the option to purchase the equipment at its determined Fair Market Value, return the equipment, or upgrade to a newer version of the equipment.
- FMVs are often the most affordable leases.
- FMV leases are often used when the company does not want to retain the equipment at the end of the lease term.
- FMV leases help manage the cost of continuous upgrades and can prevent inefficiencies and maintenance issues related to aging and outdated technology equipment.
- FMV leases feature a fixed monthly payment.
- Since the lessee does not own the equipment it does not appear on the company’s balance sheet, allowing the lessee to deduct the monthly lease payments as an operating expense.
$1 Buyout Lease
A $1 Buyout Lease, also called a capital lease, is similar to purchasing equipment with a loan. There is a higher monthly payment compared with an FMV lease, but at the end of the lease term, you purchase the equipment for $1. Since it is very similar to taking out a loan on the equipment, this type of lease is often used when a business plans to keep the equipment for a long period of time.
- $1 Buyout Leases have a set lease term
- Fixed monthly payments
- Equipment ownership is often transferred to the lessee, and the equipment appears on the balance sheet as company assets.
- At the end of the lease term, the lessee purchases the equipment for $1.
Hopefully this post cleared up any confusion about Why Would Companies Choose to Lease Rather Than Buy a Copier?
We offer both Fair Market Value and $1 Buyout leases and can help you determine the best equipment lease/finance solution for your business – and make the process easy for you!
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