Leasing Program

Most merchants have heard the horror stories about leases and think that all leases are that way. This just isn’t so. At PREFERRED Merchants we don’t play the games other providers play when discussing leases.

When leases are used appropriately, they are an effective tool. However, when abused by un-ethical providers they can cost the business valuable capital and line the pockets of the unscrupulous provider.

In our never ending commitment to our clients, PREFERRED Merchants will NEVER allow leases that take advantage of our clients.

The next time your business needs new equipment and you’re struggling with the question of whether you should buy it or lease it, give us a call and we’ll give you an honest and fair assessment of your choices. As always, you can expect a full disclosure of all terms and conditions in everything we provide you. And if we are providing an analysis of a competitors offer, we will return your review with a side by side comparison to make the process as easy for you as possible.

THE FAQS OF LEASING VS. BUYING

Leasing - The Benefits

• Leasing allows the business to keep the equipment up-to-date. Most business equipment eventually becomes outdated and needs to be replaced. With a lease, after that lease expires, the business is free to turn in the old equipment and lease newer and faster equipment which will allow the business to be more competitive.
• With a lease, your business will know it’s equipment costs and be better able to maintain it’s operating budgets.
• With most leases you can deduct the entire monthly payment (Consult with your tax professional).
• Under a lease term, the business will generally pay nothing up front. By leasing, the business is able to maintain the money that would have been used to purchase equipment, in their bank account. This extra cash can be a huge benefit to the business and reduce cash flow risks substantially.
• By utilizing good leasing strategies, businesses can acquire better equipment and technology making them more competitive.

Leasing - The Downsides

• Ultimately, leasing is more expensive than purchasing. However, if done properly the extra cost can be managed to the benefit of the business.
• Depending on the lease terms, you may have to make payments for the entire lease period, even if you no longer need the equipment, which can happen if your business changes or you close the business.

Buying - The Benefits

• Your equipment is deductible. Under Section 179 of the IRS code you are allowed to deduct the full cost of newly purchased assets (Consult with your tax professional).

Buying - The Downsides

• With a purchase the business may have to tie cash that would otherwise be better put to use elsewhere such as marketing, advertising, and other things that would help grow the business.
• Because all equipment becomes outdated sooner or later, you’ll eventually be stuck with outdated equipment that you must replaced. If you purchase equipment that means another outlay of business capital.

General Questions & Answers you should know:

• There are generally two types of leases, capital leases and operating leases.
  • Capital leases are like loans. Under these leases the equipment is considered an asset on your balance sheet. Along with this you get the benefits such as tax depreciation, but you also get the risks.
  • Operating leases usually mean that the leasing company retains ownership. For tax purposes the business with generally consider the equipment a monthly operating expense rather than a depreciable asset. These tend to be the most popular choice among small businesses.
• There will typically be two buyout options. The choices are usually a fair-market value (FMV) option and a $1 buyout option.
  • FMV typically allows the business to buy the equipment at the end of the lease for its fair-market value.
  • The $1 buyout option allows the business to buy equipment for $1 when the lease expires.
• Most leases for run 24, 36 or 48 months. Most experts agree that while the longer leases allow for lower monthly payments, smart business owners will usually select a lease term that takes the life expectance of the equipment into consideration. For instance, if you are leasing equipment that will be outdated in 2 years, a 4 year lease would be un-wise.
• Most leases will require the leased equipment to be insured.
• Most leases provide for the ability to add equipment to an existing lease. The lease payment will be recalculated but the lease terms don't usually change.

To learn more about our leasing programs, contact us today.

“All merchant accounts are referred to and processing services provided by registered ISO/MSP of HSBC Bank USA, National Association Buffalo, N.Y, Wells Fargo Bank, N.A., Walnut Creek, CA, Harris N.A., Chicago, IL.”