1. LOW COST:
The Lessor can retain certain tax benefits associated with a lease and pass those benefits on to you through the lease rates that are often lower than market debt rates of a like term.
Typically the rate is fixed for the lease term, avoiding fluctuations in market interest rates. The forecasting and budgeting processes are improved as you can more precisely define your cash outlays.
3. 100 PERCENT FINANCING
The total cost of the equipment is financed under the lease.
4. NEW SOURCE OF CAPITAL:
Leasing provides an additional source of funds without disrupting available bank lines of credit.
5. OVERCOMES DEBT LIMITATIONS:
Leasing can overcome debt limitations on most IRB and IDA financing.
6. OFF BALANCE SHEET TREATMENT:
When properly structured, lease payments can be expensed in accordance with FASB-13 which can improve financial ratios and prove to be an aid when seeking conventional bank financing.
7. IMPROVED TAX SAVINGS AND CASH FLOW:
The cost of leasing can often be treated as an expense for tax purposes and may result in a larger tax deduction than if you claimed a depreciation expense. This can mean a substantial tax savings and improved cash flow.
8. ELIMINATION OF COMPLIANCE ISSUES:
For tax-exempt projects, your Kensington Capital Corporation lease, being subject to annual appropriation, may help you to avoid having to comply with local, state and federal regulations, and ordinances related to the issuance of debt.
9. HEDGE AGAINST INFLATION
In an inflationary economy, future rents for equipment acquired through a lease based on today's price will be paid in inflated dollars, as is generally the case for long-term, fixed rate forms of financing.
10. CONVENIENCE AND UPGRADABILITY:
Leasing is often simply more convenient than other forms of financing. Documentation is simpler and more flexible and gives the customer the ability to upgrade the equipment at any time during the lease term.
11. BUDGET LIMITATIONS:
Acquiring equipment not contemplated by a capital expenditure budget can sometimes be accomplished through the use of a lease with the payments being structured as an operating expense.
12. ACQUISITION COSTS AMORTIZED:
Most cost incurred in acquiring equipment can be structured into the lease payments and amortized over the life of the lease. These costs include delivery charges, interest charges on advance payments, sales or use taxes and installation costs. Such charges are usually not financed under alternate methods of equipment financing.