SundineEnterprises, Inc.

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© 2016-2017 | Sundine Enterprises, Inc.

Lease ☺: A lease requires no down payment and finances only
the value of the equipment expected to be depleted during the
lease term. The lessee usually has an option to buy the
equipment for its remaining value at lease end.


​Lease ☺: The leased equipment itself is usually all that is
needed to secure a lease transaction.


​​Lease ☺: A lease does not contain restrictive covenants that
limit the lessee's ability to borrow future funds. As long as the
lessee is current with the terms and conditions of their lease, the
lessor can not disrupt the lessee's use of the equipment or
demand payment in full of the outstanding lease payments.


​Lease ☺: A lease requires only a lease payment at the
beginning of the first payment period which is usually much
lower than the down payment.


​Lease ☺: The end user transfers all risk of obsolescence to the
lessors as there is no obligations to own equipment at the end
of the lease.


​Lease ☺: When leases are structured as true leases, the end
user may claim the entire lease payment as a tax deduction.
The equipment write-off is tied to the lease term, which can be
shorter than IRS depreciation schedules, resulting in larger tax
deductions each year. The deduction is also the same every
year, which simplifies budgeting (Equipment financed with a
conditional sale lease is treated the same as owned equipment.)


​Lease ☺: Leased assets are expensed when the lease is an
operating lease. Such assets do not appear on the balance
sheet, which can improve financial ratios.


​​Lease ☺: More of the cash flow, especially the option to
purchase the equipment, occurs later in the lease term when
inflation makes dollars cheaper.


​Loan : A loan requires the end user to invest a down payment
in the equipment. The loan finances the remaining amount.​


​Loan : A loan usually requires the borrower to pledge other
assets for collateral.


​​Loan : A loan agreement usually includes restrictive
covenants that require the customer to maintain certain financial
ratios that may restrict the customer's ability to borrow future
funds. In the event the customer violates one or more of the
covenants, the lender has the right to demand payment in full of
the outstanding loan amount even though the loan payments
have been made on time.


​Loan : A loan usually requires two expenditures during the
first payment period; a down payment at the beginning and a
loan payment at the end.


​Loan : The end user bears all the risk of equipment
devaluation because of new technology.


​Loan : End users may claim a tax deduction for a portion of
the loan payment as interest and for depreciation which is tied
to IRS depreciation schedules.


​Loan : Financial Accounting Standards require owned
equipment to appear as an asset with a corresponding liability
on the balance sheet.


​Loan : A larger portion of the financial obligation is paid in
today's more expensive dollars.



The Advantages of Lease/Finance vs. Loans