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Which is Better - Buying or Leasing?

Technology for the healthcare and medical industry is changing at a rapid fire pace. What is "top of the line" today can change tomorrow and become obsolete. So, which is better to lease or own your heathcare equipment?

1. The short-term monthly cost of leasing equipment is ALWAYS SIGNIFICANTLY LESS than the cost of buying.

For the same equipment, same price, same term, and same down payment, monthly lease payments will always be 30%-60% lower than loan payments. This is still true even when compared to 0% or low-interest loans.

2. The medium-term cost of leasing equipment is ABOUT THE SAME as the cost of buying.

The overall cost of leasing compared to buying, over the same lease/loan term, is approximately the same. Comparisons sometimes show buying to cost a little less than leasing due to fewer fees, lower total finance costs, and the assumption that purchased equipment will return some value if it is sold or traded at the end of the lease/loan (often times a bad assumption). However, when the benefits of wisely investing monthly lease savings are considered, along with sales tax savings (in most states), the net cost of leasing can easily be less than buying.

3. The long-term cost of leasing equipment can be MORE than the cost of buying.

If a lessee keeps the equipment after the loan has been paid in full, the cost is spread over a longer term. It doesn't take a brain surgeon to figure out that the cost of buying one piece of equipment and using it for ten years is less expensive than leasing four or five different pieces of equipment over the same period. Therefore, leasing can (in some instances) be more expensive than long-term buying.

Does this mean leasing is always the better choice? Not necessarily. Payment should not be the only factor that should influence your decision to lease or buy. The intended use of the equipment, the projected revenue it will generate, maintenance cost versus service cost, the desired end result (asset or expense) and your overall business goals should all be a considerable factor in your selection to lease or buy.

**Always consult with your tax advisor before executing any lease transactions**

 

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