Most resellers know that leasing can help them win bigger deals and stretch their credit lines.
But many are still put off this potentially useful business tool by some common misconceptions about how it works. So let's debunk the Top 10 leasing myths one by one.
1. Leasing is only for businesses that can't afford to buy their equipment.
In fact, leasing is widely used by large organisations such as local authorities. They know it can leave capital available for other purposes.
2. Leasing is suitable only for big companies.
More and more small businesses are recognising the advantages. Leasing is available for every business, whatever its size.
3. A lease means you are stuck with a three- or five-year term and can't upgrade during that period.
If this were the case no one would use it. Almost all leases allow users to upgrade at any time to take advantage of technological advances or meet new business needs.
4. Taking out a lease involves lots of paperwork.
In fact, it can involve none. As online applications become more common, all that's needed is the company name and registration number, or a home address for sole traders and partnerships. The documentation is emailed to customers.
5. Leasing is so complicated you need to be a financial expert to understand it.
The process has become much simpler. It's no more complicated now than consumer finance.
6. Leasing means you can't take advantage of capital depreciation tax allowances.
Whereas capital expenditure can be written off only over a period of years, the full lease cost is allowable against tax in the current tax year.
7. Software can't be included.
Yes it can, as can training, cabling and installation. Leasing is ideal for financing the whole solution without impinging on other budgets.
8. Leasing is available only for established businesses.
While some providers sometimes ask for three years' trading, leasing is also available for younger firms.
9. Taking up leasing will compromise existing credit lines.
Exactly the opposite is true. Leasing is a useful way of stretching credit lines. It has no effect on overdraft availability, credit lines or bank facilities.
10. Leasing is difficult to sell.
Given all the advantages listed here, it should be easy to convince end-users of the benefits of considering leasing as well as straight purchases.
Steve Feacey is CF asset manager at Midwich.
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