A common phrase you may encounter when you’re exploring leasing and financing is that you can conserve your capital and preserve your credit. It sounds great, but what exactly does this phrase mean?
Conservation of Capital refers to the upfront cash expenditure that you incur when you acquire technology. When you pay with cash, you will pay 100 percent of your technology solution upfront. However, with leasing or financing, you can conserve your cash (capital) and make a minimal cash outlay or even no upfront payment.
Preservation of Credit involves the line of credit that you have access to with your financial institution. If you choose to use a bank loan to acquire your technology, you have to tap into that line of credit. Although it’s possible, it is not the best decision to utilize a bank loan, because your down payment is typically 30 percent of the total cost, your interest rate is floating, you can’t finance software and it impacts your financial statement.
By using leasing or financing, you can save (preserve) your credit line for more appropriate activities like building or expansion costs. You also have a minimal upfront cost, a fixed rate, the ability to finance 100 percent software and it has no impact to your financial statements.
If you would like to discuss further leasing or financing options, please contact email@example.com or call (800) 347-0628 and ask for a VAR Technology Finance Leasing Specialist.