Difference Between A Lease And A Loan

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Difference Between A Lease And A Loan

We know how to get your business financed!

Equipment leasing available nationwide for all types of equipment. We have financed small and large business, start up and well established. We work quickly with you to get the equipment that you need. Equipment leasing is a great way to obtain the equipment you need to make your business work while preserving your working capital .

The Difference Between A Lease And A Loan

Interest RatesFixed Rate / Fixed PaymentsUsually an adjustable rate
TermUp to 5 years on all equipment over $2,500Usually 2-3 yr.
Down Payment100% FinancingTypically 20% - 30% of total cost
Financial StatementNot mandatory for transactions up to $150,000, used for customers wishing to submit financial, and financial are not required annually after approvalRequired on almost all transactions over $10,000, and bank usually requires annual updates to maintain loan
Financial ReportingNot required to be reflected on balance sheet as debtCarried on balance sheet as debt
Sales TaxFinanced with monthly paymentMust be paid in advance
Hidden RequirementsNone- UCC filling & processing fee only at lease execution, no lease termination costsCompensating balances, other bank charges, loan covenants
Tax BenefitsUsually 100% deductible over the term of the leaseDepreciated over the IRS's useful life of the equipment
Effective CostLower than bank financing due to tax benefits, lower down payment, longer lease term and no requirement for compensating balancesHigher cost due to longer depreciation schedule, larger down payment, adjustable interest rate, and other hidden charges
Opportunity CostFrees bank lines and cash allowing you to invest further in your businessTies up bank lines possibly preventing opportunities to expand your business


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