The Advantages of Leasing Medical Equipment
Tax Write-Offs, Financing Rates and More
Leasing medical equipment, rather than buying, is a practical alternative for hospitals and other medical facilities that want to conserve cash and enjoy tax benefits. Leasing also offers the flexibility to change or upgrade your equipment before it is obsolete. If you’re unfamiliar with the benefits of leasing, this article will offer you a detailed look at the pros so you can make an educated decision the next time you’re in need of new equipment.
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- Tax Savings – The IRS considers equipment leases a tax-deductible expense. Hospitals and medical practices can deduct the lease payments from their income, which lowers the overall tax burden and reduces the cost of the lease.
- No Down Payment – Purchasing medical equipment requires shelling out a large amount of cash upfront, while leasing usually requires no money down. Instead, monthly payments are spread out over a number of years until the lease expires or is renewed. The capitol you save can be used for other critical investments and operating expenses.
- Latest Equipment – Medical technology changes rapidly. Equipment that is just a few years old often is already out of date. When you purchase equipment, you’re likely stuck with it for a long time because of the large investment. With a lease, you can trade it for the latest equipment every few years. This is particularly crucial in the medical field because, in many cases, state-of-the-art equipment can be lifesaving.
- Flexibility – Many leasing companies also offer the option to trade-in or upgrade before the lease term has ended, particularly if you’re unhappy with the equipment or it is problematic. This means you’re never saddled with equipment you don’t want. There may be an extra fee for this, but the option is there. Also, with leasing there are several options for what to do when the contract expires: You can return the equipment, purchase it outright or walk away and turn to a different leasing company.
- No Maintenance – The leasing company handles all maintenance and repairs, so if there’s a problem all you have to do is pick up the phone. It’s important to note, however, that maintenance and repairs are not always covered in the cost of the lease. It’s crucial to find out what’s included before you sign a lease agreement. However, even if the maintenance costs extra, most companies allow you to roll that in to your monthly payment. Training and installation can be rolled in, too.
- Simpler Buying Process – The leasing company can walk you through the pros and cons of various types of equipment to help you make the best decision. That saves you the time and hassle of having to do the research on your own. It’s always advisable to do some independent research, but going through a leasing company can shave valuable hours or days from that. Turnaround time is also typically fast with a lease. You can fill out an application and have a decision, in some cases, in a number of hours.
Like anything, leasing has its disadvantageous, too. Generally, leasing is more expensive over the long-term that an outright purchase – you’re paying extra for the convenience of not having to shell out a large amount of capital upfront. And, if you are purchasing equipment that tends to have longevity and won’t quickly be obsolete, buying could be the smarter option. Either way, it’s always best to look into both, assess the financials and make an informed choice.