According to the CCH Business Owner's Toolkit online, there are times when a lease may be better than a decision to purchase an asset. This is because up-front outlays of cash associated with a lease are usually less than those required to purchase an asset. Typically, with a lease an organization's main initial cash expense may well be limited to some form of deposit plus the first lease payment. With a purchase, the organization usually must have the cash on hand to pay the total purchase price or in the alternative receive relatively short 'open account' terms of sale requiring payment of the entire asset cost in 30 or possibly even 60 days. Leasing may allow an organization to conserve cash, and avoid problems associated with buying equipment that may quickly become obsolete. The organization may find it easier to qualify for a lease than for a loan needed to purchase the asset outright. In the start-up or growth stages, an organization may want to keep cash outflows as low as possible, and leasing can help an organization to accomplish this goal. Other advantages of leasing include reducing concerns about obsolescence, and the desire to keep certain assets off the balance sheet. Other advantages include the fact that the leasing company may be able to negotiate a lower price based on its purchasing power (Leasing Advantages, 2005).
On the other hand, buying an asset even - if the organization needs a loan to supplement their down payment - can have certain advantages. According to another essay published on the CCH Business Owner's Toolkit online, one of the biggest advantages of purchasing over leasing involves the fact that the organization's costs over the life of the asset are generally going to be lower than if the asset were leased. Also, the asset owner can extend the use of the equipment beyond the typical lease period, and the owner can sell or trade the asset when it is most advantageous for them to do
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