AT HANNA, WE WANT YOU TO KNOW BOTH SIDES OF THE STORY!!

WHAT DO YOU KNOW ABOUT  LEASING?

Vending Equipment Sales & Service

To Lease Or Not To Lease

  Acquiring an expensive piece of business machinery is not as simple as picking up a packet of pencils.  Long-term investments and commitments require extensive thought and weighing of all the variables.  Leasing just might be your method of choice- then again it might not. 

  There are general rules of thumb that can help you decide what is right for your company.  George N. Christie, executive vice president of the Credit Research Foundation, Lake Success, N.Y., lists some pros and cons of leasing: 

Advantages

�          Depreciation might not help

�profits for new or small companies, so

�there may be no advantage in owning.

�         A company that can use deprecia-

tion to offset profits may still have to pay alternative minimum tax. In that case, leasing may result in a lower cash drain on the firm.

�          Lease payments are tax deductible. 

�          Lease payments do not vary with

interest rates, whereas commercial loans often do.  Thus, leasing improves a small firm�s ability to budget expenses.

�          Monthly leasing payments are

lower than capital outlays.

�          When leased equipment is obsolete

can usually be replaced easily

�          There is flexibility in trading up.

�          Leasing allows the firm to show

 greater financial strength since all resources are used as working capital rather than for plant and equipment. 

�          It is an accessible source of credit

 that often is simpler than bank financing. Many leasing companies are responsive to smaller businesses� needs.

�          Some leases provide a �window�

allowing the customer to cancel at specified times during the contract.

Disadvantages

�          The total paid is much higher than

the cost of purchasing, since the lessor must also make a profit.

�          Some leases come with severe

contract restrictions regarding cancel- lation, renewal or purchase option.

�          The useful life of the equipment

may exceed the term of the lease.  If you lease a piece of equipment that you think has a five-year useful life, you could lose the last two years� use of the equipment, unless you pay the extra cost.

�          A continuing cash outlay may hurt

 more than a one-time bite.

WE SELL SATISFACTION

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       What is the real cost of a Lease?

       In this example we will assume a 24% tax bracket for your company

If you had $ 30,000 to invest in your business, could you get a return of more than $63 per month?

If so, you should lease this equipment and get the return you deserve.������������������������ Continued on next page

Equipment Cost

$ 30,000

Lease Term

60 months

Purchase Option

10%

Up Front Costs

(Includes first two month�s security deposit and a one time $100 documentation fee)

$  1,450

Total Pay-out

$ 40,500

After Tax Pay-out

($40,500 x 24% tax savings of $9,720)

$ 30,780

Plus Buyout

$ 3,000

Total After Tax Pay-out

$ 33,780

Less Cost of Equipment

$ 30,000

Actual Cost of Lease

$ 3,780

Divided by Lease Term of

60 months

Per Month Cost of Lease

$ 63