A Comparison of Leasing and Buying - 1314 Words

Lease vs. Buy 1. Introduction: In today’s world, customers often face a dilemma about whether to buy or lease. Lease is an agreement in which one party gains a long term rental agreement, and the other party receives a form of secured long term debt. On the other hand, buying involves transfer of ownership from seller to buyer. Buying or leasing decision depends mostly on customer’s preference. There are many factors to consider before taking a buying or leasing decision. 2. Factors Influencing Buying vs. Leasing Decision: Following are the factors a customer should consider before taking a buying or leasing decision. 3.1. Advantages of Leasing: 1. Low monthly payment: Monthly lease payments are 30-60% lower than†¦show more content†¦Down payment: For purchase loans usually customers are required to make a big down payment. 2. Monthly payments: Monthly payments for purchase loans are higher than for lease. 3. Depreciation: The moment a product is sold it is considered as used product and price of the product is less. There are some exceptions to this rule as land; gold etc. usually appreciates over time. For other products customers are actually buying products that will depreciate over time. 4. Maintenance: Maintenance cost is high for purchased products as after manufacturing warranty runs out customers need to pay maintenance cost. 5. Technology: In today’s world technology changes rapidly. By buying a product a customer is stuck with that product or need to sell that product at depr eciated price to get latest product. 6. Life plans: Buying may be disadvantageous to people who are expecting changes in their life. For example, from a single professional someone can become a parent of three in 3 years. So for him/her selling a compact car after three years and replacing it with minivan is would be more expensive then leasing the first car and simple returning it. 7. Hassle of disposing: For purchased products a customer needs to take the hassle of selling or recycling it. 3. Lease vs. Buy Scenario: Now I am going to compare between buying a car vs. leasing a car. For this purpose I am assuming the customer is going to take a purchase loan. AnotherShow MoreRelatedService Line Management905 Words   |  4 Pagesadditional services and customer satisfaction. To focus on patient care, one must engage in property development. There are multiple ways this can be accomplished. To begin, this writer will focus on the advantages and disadvantages of building, buying, or leasing property to establish a new orthopedic service line. First, the concept of building a Physical Therapy center should be considered. As the Chief Financial Officer (CFO) stated in the email, the cost of construction is $120 per square footRead MoreReal Estate and Capital Structure Decisions – Lease-Versus-Buy Analysis1159 Words   |  5 Pageswhat is known as the â€Å"leasing puzzle† – the answer simply being that the two forms of financing are not cost equivalent in the presence of capital market imperfections, despite both being credit forms. The case presents two opposing anecdotes: one about a trading company that bought its office and profited hugely from this decision as the market and capital values move upwards, but then faced huge losses as the market declined; and another from a comparable trading company leasing office space, and applyingRead MoreBurlington Northern Railroad Company: Equipment Leasing Essay1139 Words   |  5 PagesBurlington Northern Railroad Company: Equipment Leasing To: Rob McKenney Vice President Treasurer BNRR From: Paul Weyandt Director of Equipment Finance BNRR Date: July 15, 1990 Subject: Lease Vs Buy Option for Auto Racks Equipment This memo is in regard to the recent proposal of leasing or buying the bi-level and tri-level Auto Rack equipment for Burlington Northern Railroad Company. As indicated before, this equipment is a great investment for our companyRead MoreAnalyzing Lease vs. Buy Decision1620 Words   |  7 Pagesstatement. 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Besides, modern technology has lead to development of more advanced photocopiers. With all the models available now, you can easily feel confused when picking a suitable machine for your needs. But, there is an effective solution: Bizpare ®. It is a photocopier comparison engine that generatesRead MoreMister Italy Pizza And Deli Case Study1188 Words   |  5 Pagespurchase or lease a vehicle to stay competitive in this market and reach out to its customers. Therefore, the only remaining consideration is whether to buy or lease a vehicle. This report will discuss the advantages and disadvantages of purchasing or leasing a vehicle. 3. FACTORS FOR CONSIDERATION AND CRITERIA 3.A. Mileage Lease – According to McNew (2016), the mileage restrictions typically range from 9,000 to 15,000 miles a year. Purchase – A huge benefit is the lack of a mileage restriction (McNewRead MoreCase Study Hypothesis: Wow Gifts Ensure Retention and Customer Loyalty713 Words   |  3 Pagesof the allotted budget. Research Questions Do wow gifts gain customer loyalty? If so what are the best actions to take in order to ensure repeat business? If customer loyalty is gained from the wow gifts, leasing options are the best bet to get customers coming back for a long time. Leasing presents the option of borrowing a car for a pre-determined amount of time. This then gives the company an opportunity to get repeat customers with the wow gift, continuing profit for longer periods of timeRead MoreCapital Structure Approach1558 Words   |  6 Pages000 or è · ¯ Leasing the technology at 6% with a $50,000 down payment. The working capital generated by Competition Bikes, Inc. is sufficient for maintaining either the leasing or purchasing option. In order to make a determination, the after tax cash flows and the present value of outflows need to be reviewed. Comparing the Lease vs. Purchase options side by side for the comparison for cash flows provides necessary information. The table below provides this information. Year Leasing Purchasing