Struggling to maintain a good bank? Whether you’re a business or an individual - your mind will be set on leasing after reading this, even if you’re not looking at buying something any time soon!

Let’s start with what Leasing actually is :

When you Lease a product, e.g. a Car, Telephone System or a House - You will typically have no upfront fees, possibly there will even be discounted rates in the initial couple of months. These monthly fees will rack up, however you will most likely not pay more than what you would if you had paid upfront for your product.

Leasing is generally carried out through monthly, or quarterly payments - Depending on the preference of the Lessee.

What are the Advantages of Leasing?

• You can choose your Lease Term, this is helpful when a product may have only 3 Years useful life, however, you only need it for maybe 6 Months.
• More consistent cash flow, instead of having an irregular month with a big purchase, you can have consistent cash flow results as the monthly payments are significantly lower
• Little to no risk of Discontinued products - When you opt into certain leases e.g. for a Telephone System, you will be offered to upgrade your system whenever newer products are released, this eliminates the risk of obsolescence. This is more significant though if you are claiming title on the equipment at the end of the term.

Are there disadvantages? Yes, but they’re very obvious ones:****

• No ownership of the equipment - If the contracts conditions state correctly, the Lessor has the free right to take the equipment from you and cancel the lease at any time
• Extra costs usually come in for maintenance of the equipment
• There is a hefty bit of documentation and contracts to run through - Always read the Terms and Conditions thoroughly before signing so you know what you’re getting into!

Even with these drawbacks - it’s definitely wise to Lease as if you buy upfront, there’s gonna be some point where you need to sell your equipment back off - and with depreciation it may be the case that you can only sell at 10% of purchase value, with leasing this risk is avoided as you will always have new equipment.

Written by Harrison Jones

References : (https://efinancemanagement.com/sources-of-finance/advantages-and-disadvantages-of-leasing)