Evaluate Your Financing Options A lease is a financing agreement that is structured to meet your businesses needs. To decide if leasing is the best option in your case, you must first understand those needs and ask yourself these questions:
How does this sign make my business more competitive?
What is the most efficient use of my cash flow to pay for this equipment?
What is my estimated Return on Investment (ROI)?
Will this be enough signage for the future?
Obviously, you will want to factor the cost of leasing into your evaluation. Generally, the cost of leasing is comparable to those of other financing options when looking at the whole transaction. It is important to point out that leases are not loans. As a result, their costs are figured differently from those of loans. Leases take into account that the equipment is worth something at the end of the lease term. This is called its residual. Residuals are built into lease pricing, usually making the lease payments lower than a loan. To compare lease products, it is better to compare monthly payments than to try to compare loan interest rates with lease rates. On a cost-of-capital basis, leasing may be the least expensive option. Leasing companies can offer competitive rates for a number of reasons. Lessors - with their volume purchasing power - can secure attractive financing deals and pass along the savings to the lessee. The lessor also is better able to take advantage of the deduction for depreciation expense that comes with ownership. Once you've completed your evaluation and decided to lease your next sign acquisition, the first step is to select the type of signage that fits your needs. You should consider these factors in determining which is best for you.
Your desired outdoor advertising image.
The cost vs. benefit of different sign technologies.
The initial investment, monthly payment, term, and buy out that works for your business.
Your tax situation
Your cash flow
Your businesses specific needs as they relate to future growth.
What Types of Business can Lease? Leasees vary widely from small, one-person independent businesses, to operations with multiple locations. The minimum starting requirements for leasing your new sign or LED electronic message center is surprisingly low.
Our leasing partners offer a lease program for almost every sign product we represent with payments starting under $100 per month and terms as short as 24 months. All of our lease programs require a "buy out" at the end of the term, so your sign stays with you. Buy outs can be from $1 to 10% of the total cost.
To Lease or Not to Lease... ...that is the question you might be asking. Take a minute and familiarize yourself with this comparison of all three options.
Lease
A non-cancelable contract extending over a fixed period of time.
Bank Loan
A non-cancelable contract repaid in regular installments.
Cash Purchase
Using working capital acquisitions.
Advantages
100% financing
May be off-balance sheet financing
Preserves bank lines
Conserves capital
May provide tax advantages
Fixed terms & payments
Flexible terms
Easy add-on/trade-up
Full use without ownership
Creates new credit source
$1.00 and 10% leases provide benefits of ownership
Lets you pay for the equipment as you use it
Advantages
Benefits of ownership
May provide tax advantages
Advantage
No financing charge
Benefits of ownership
May provide tax advantages
Disadvantages
Non-cancelable agreement
Disadvantages
Balance sheet financing
Relatively short term
Extensive paperwork
Covenant restrictions
Uses credit lines
No obsolescence protection
May require compensating balances, down payment, and origination fee
