| LEASING |
BANK LOAN |
CASH PURCHASE |
| A non-cancelable contract over a fixed term |
Repaid in regular installments |
Use of working capital |
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| Advantages |
Advantages |
Advantages |
| *100% Financing |
*Direct ownership |
*No finance charges |
| *Conserve capital |
*Depreciation |
*Direct ownership |
| *May lessen tax liability |
*Appropriate when bank lines remain untapped or there is a
loan covenant required |
*Depreciation |
| *Preserves bank lines |
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| *Flexible terms |
Disadvantages |
Disadvantages |
| *Hedges against inflation |
*Capitalizes equipment |
*Attacks cash reserves |
| *Obsolescence protection |
* Relatively short term |
*Negates time value of money |
| *Fixed terms and payments |
*Interest rate subject to adjustment during term |
*Reduces time value of money |
| *Full use without ownership |
*Extensive documentation |
*Reduces investment leverage |
| *Creates new credit source |
*Exhaust credit lines |
*No hedge against inflation |
| *Easy add-on/trade up |
*Non-financial charges |
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*No obsolescence protection |
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| Disadvantage |
*May require down payment and/or origination fees |
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| *Non-cancelable |
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