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Leasing | Reasons For Leasing
Reasons Companies Lease Technology
OPERATIONAL
Budget Management
- Lower down payment, no up-front costs
- Lower monthly budget/ expenses
- Greater control over IT budgets
- Easier administration of IT charge-backs
- Streamlined access to capital approvals
- Spending authority
- Cost constraint
Flexibility and Convenience
- Timing factors
- One-stop shopping
- Asses management
- Flexible payment options
- Control of the manufacturer
- Avoids disposal problems
- Economies of scale
- Priority delivery
Technological Change
- Technological obsolescence
- Upgrade options
- Takeouts and rollovers
- Return provisions
FINANCIAL
Off Balance Sheet Financing
- Improve earnings
- Return on assets
- Improved financial ratios
- Stranded assets
- Reporting convenience
Financial Issues
- Lower cost alternative
(lease vs. buy)
- Additional source of financing
- Less administration
- Reimbursement policies
- Takeouts and rollovers
Income Taxes
- Reciprocity of tax benefits
- Deductibility of lease payments
- Purchase penalties
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