Instead of necessitating large outlays of cash to purchase an asset, lease payments are spread over time, typically three to eight years. Lease payments can be planned and budgeted for months or years in advance, thereby simplifying cash flow planning. This is perhaps the most compelling reason to lease. Where leasing be- comes more attractive is when you factor in your cost of capital. As an al- ternative financing method, leasing allows companies to acquire assets without depleting existing sources of credit.
Lines of credit remain available for unexpected priorities, short-term or seasonal needs.
Availability of credit in tight markets. The credit criteria of lease financing com- panies may be less stringent than those of bank credit committees. Leasing is avail- able even in times of tight money when cash loans may be hard to obtain. Generally, lease payments are fully deductible as a business expense, whereas depreciation deductions from owned equipment may be subject to alternative minimum tax under the 1986 tax code changes. Consult your accountant or financial advisor for details.