Take a closer look at payment options.

There are several different financing tools that customers may use to meet their equipment needs. To help our customers make the right business decision, it’s important to understand the advantages and disadvantages of each of these options.

  Advantages Disadvantages
Capital
Lease
(balloon option or $1)		 • Low or no money due up-front
• Rates and payments are fixed
• Bank lines are not affected
• Customer gets all the tax benefits of ownership
• Additional credit source and reference is established
• Access to manufacturer supported programs
• End-of-term purchase price is predetermined up-front		 • Credit review, approval and documentations required by the lender
• Risk of equipment obsolescence
• Non-cancellable
True Lease
(Fair Market Value
and Operating)		 • Low or no money due up-front
• Lowest possible monthly payment
• Expense can often be approved more easily internally
• Flexibility at end of term - return equipment, purchase equipment for
fair market value (FMV), continue to lease, finance FMV purchase option
• Off-balance sheet financing may enhance financial ratios
• Entire lease payment may be deductible for tax purposes
• May avoid restrictive debt covenants
• Bank lines are not affected and additional credit source and reference
is established
• Fair market value not to exceed cap is available		 • Depreciation benefits are passed to Lessor in exchange for lower
monthly payments
• Non-cancellable
Bank Loans • Customer gets all the tax benefits of ownership
• Typically cancellable with prepayment penalty
• Line of credit may be already in place
• Comfortable and familiar		 • If the payment floats, the borrower has risk of fluctuating interest rates
• Bank may require a down payment
• Higher fees
• Bank lines may be tied up and unavailable for future needs
• Possibility of blanket lien on all equipment
• Does not create additional financing relationships or payment history/reference
• Risk of equipment obsolescence
Cash • Customer owns the equipment and therefore takes the tax and depreciation
benefits of ownership
• No long term liability or debt obligation		 • Large capital outlay may leave the business drained for future needs
• 100% impact on current year capital budget
• No interest expense to write-off
• Does not create finance relationship or payment history/reference
• Risk of equipment obsolescence