A home business just starting-up definitely needs all the operating capital that it can hold on. Therefore, to invest much needed capital into purchase of equipment, building, or vehicles could affect other necessities of the business.

By leasing, you can obtain the needed equipment or vehicle without a big capital outlay. You should always investigate the advantages of leasing against purchasing. There are lenders who offer longer term with lower monthly payments compared to that if you purchased the equipment or vehicle through a loan.

Unlike loans for purchase, which usually require large down payments, leasing sometimes offer 100 per cent financing. If you have a good credit record, you can even get a vehicle with no down payment. This is the point where you save your cash for something else while you drive your new vehicle out of the dealership. However, in the long run, leasing will cost you more, although it can help you out effectively during your start-up period.

Here are some advantages of leasing:

Minimal cash outlay - You can acquire your vehicle with 100% per cent financing.

No obsolescence - You can negotiate for a short-term lease and change the vehicle with a new model at the end of the lease contract.

Tax advantage - (Check with your accountant). If specifically used for the business, you can claim mileage deductions from your income tax.

Flexibility -You can spread the lease over longer periods than a loan, thus reducing the monthly payments.

Disadvantages:

No ownership: The lessor own the vehicle. You have no equity to it, unless the contract has an option to purchase clause.

Higher cost - Even if the monthly payments are lower, the ultimate cost of the vehicle will be higher than if you purchased it.

Non-cancelable lease contract - Some leases have non-cancelable clauses and charge severe penalties for early termination.

High Insurance Coverage requirements- Some lessors require very high insurance coverage like $300,000/$100,000 coverage and you pay the premiums as compared to purchase where you can decide the amount of your coverage.

About the PowerHomeBiz.com Guide: 

Nach Maravilla is the Publisher of Power Homebiz Guides. He has over thirty years experience in sales and marketing of various products, which covered as he jokingly describes, "from toothpicks to airplanes"  He also had extensive experience in International trading and he always excelled in special promotional ideas for  retail outlets. 

The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.