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If it appreciates, buy it. If it depreciates, lease it.
The main reason for this reluctance to lease is usually the lack of knowledge of the benefits of leasing and the confusion caused by the terminology that surrounds it. In the following article we will explain, in easy to understand language, the leasing process and how it may be the ideal choice for you.
An educated driver will always be able to get a better deal.
When making any important financial decision it pays to be thoroughly prepared and while most people will invest a significant amount of time and effort when house buying or looking for a good pension product, for many drivers for instance it is deciding which make and model they would like to drive that takes precedent over car finance. This is often the case when choosing equipment for business. While choosing the correct make and model is an important, and usually enjoyable, aspect for drivers, knowing what form of car finance is best value for money for them, given their personal circumstances, can have a significant impact on the costs of driving that new car. This is quite simply the same case for capital plant procurement
The more information and knowledge that you have on a subject, the more likely you will be to find the best deals and to negotiate better terms of any agreement. The costs associated with personal transport, whether car ownership, public transport season tickets, or car leasing, is often one of the main costs people have to deal with after accommodation, being in a position to accurately estimate the total costs of driving a car will help keep your costs in control.
The benefits of leasing
Before we take a look at the main benefits that leasing has to offer it is worth bearing in mind the famous quote of billionaire oil tycoon J.Paul Getty – “If it appreciates, buy it. If it depreciates, lease it”. This quote, in a nutshell, encapsulates the main benefit of leasing. A car for instance is not like a house which usually appreciates in value after purchase,whereas, when you drive away in your brand new car it is already losing value. This is exactly the same case with capital plant within the funeral home.
If you take out a loan or finance agreement to purchase a car for instance, you are simply paying a set amount a month for something that is losing, not gaining value. In simple terms, you are buying a product which is depreciating in value not only every time you drive it but also when it is sat on your drive. Leasing is a different proposition for drivers, instead of owning the vehicle, the driver is pays a monthly amount to use that vehicle over a set period of time (typically 24 or 36 months). At the end of the agreement the car is taken back by the leasing company.
Please note
that leasing can be more efficient financially than purchasing outright as soon as you take into consideration the cost of the depreciation on the original purchase.
ie If you purchase a car for £10,000 at 0% finance over 3 years. The car could only be worth £3000 at the end of 3 years. You have lost £7000. Yes you have not been charged for borrowing the money in the first place, but the car has cost you a loss of £7000.
Now the same could be said of mortuary equipment in the funeral home............. unfortunately with specialist products there arn't specialist second hand buyers waiting to buy your old equipment unlike the car which can be sold at any number of garages. The market is limited
With leasing this is NOT YOUR PROBLEM............... just hand it back and start of another new contract and get your old equipment exchanged for NEW.
NO OLD OUTDATED EQUIPMENT........ NO HASSEL TRYING TO RE-BUY NEW............Or SELL YOUR OLD TROLLEY........... Job DONE
* In every case and without exception. Please always consult with your accountant or financial adviser.
Additional Information
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