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Some leases are operating leases. You may hear them called off-balance sheet financing

It means that you don't have to show any debt amount for it

So, if you have bank covenants that say that your debt has to be X% of equity, it does help

Also, it spreads a cash flow out.

Some people would say that it lessens risk, as we can turn back the equipment at the end of term (notice I said some people, I did not say me. This one can be argued either way)

Negatives

Interest rate component of the lease is sometimes not competitive

If the lease is considered a capital lease, it will have to appear on the balance sheet

Committment to pay

Usually no ability to sub-lease

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Q: What are the Positives and Negatives about Leasing Buying and Renting?
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