Choosing between owning or leasing machinery

By Lennox Mugambi, NCBA Group Director, Asset Finance and Business Solutions

Property ownership has transformed from a dominant symbol of stability and security to one of financial risk. Owning property does not necessarily translate into economic benefits. With the rise of new technology and design, things become outdated quickly. Therefore, leasing may be worth considering if the equipment you need is likely to date quickly or if you are looking for a short-term commitment.

There are also tax reasons, cash flow reasons and other costs of ownership that could mean you benefit more financially through leasing than through buying an asset. Some other key benefits of leasing include:

?Value for Money

Leasing provides the opportunity for one to potentially upgrade their tech, schedule service and maintenance if breakages occur and even gives the option to buy at a significantly reduced cost or sell the asset for a profit.

Not only does this asset refresh offer considerable cost relief to staying up-to-date, but you also don’t have to worry about getting rid of the old equipment as it is returned to the lessor. If there is still some economic residual within these returned assets, there may even be the opportunity to negotiate a trade-in for a discount on the newer models.

The provision to upgrade to the most contemporary products on the market with the best features

Leasing is a great option for consumers wanting the most up-to-date technology at a low cost.

Taking cars, for example, their technology is constantly improving and with leasing, consumers have the chance to regularly upgrade every three years to a newer vehicle with more advanced performance features.

Monthly payments are also much lower than loan payments, and leases are often easier to obtain than a loan. What's more, maintenance costs are minimal since most warranties for new cars last three years -- which is usually around the same amount of time as the average lease period.

Protection from the impact of depreciation.

Depreciation is a major concern for those who own a car as they have to manage their own financial risk, taking on the financial loss personally.

As long as you look after your assets, pay your dues on time and end contracts on good terms, you should be able to develop a strong relationship of trust, leading to further deals from your leasing partner.?