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Leasing Medical Equipment - The Facts about Leasing Medical Equipment - Down Payments, Assets, Tax Deductions, Equipment Upgrades, Buy Out Options

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Medical equipment is extremely expensive, so sometimes leasing medical equipment is the only option for physicians’ offices that want to stay ahead with the latest in technology. Of course it is also possible to take out a loan to purchase equipment, but there are some important things that should be understood about the difference between taking out a loan and leasing medical equipment.

Down Payments

The very first thing about leasing medical equipment is the fact that it does not require a down payment. A loan does require a down payment, so it may not even be an option for a new clinic or doctors’ office that does not have the money up front for a down payment. Also a lease pays only for the depreciation value of the equipment instead of the price of the equipment itself, and the office that has the lease can typically decide if they want to purchase the equipment at the end of the lease. Of course this can also be a downfall because at the end of the lease, there is no equity in the equipment. However, it may be a good place to start if funds are short.

Assets

When a loan is taken out for medical equipment, typically the borrower has to risk other assets in the event that they cannot pay the loan. This is known as collateral. However, when leasing medical equipment, the only collateral that is needed is the equipment itself because it will be repossessed if the lessee is unable to pay it.

Tax Deductions

Another important aspect of leasing medical equipment is understanding how the tax deductions work. With a loan, only part of the payments on it can be deducted. This part includes the interest and the depreciation value of the equipment that is being purchased. However, when leasing medical equipment, all of the lease payments can be taken as tax deductions.

Equipment Upgrades

Another benefit of leasing medical equipment is that many companies allow clinics or doctors’ offices to upgrade their equipment at any point during the lease. However, it is important to make sure that this provision is built into the lease because not all companies will offer it.

Buy Out Options

Before taking on a lease, it also helps to look into the company’s buy out options at the end of the lease. Different companies have different policies, so taking a closer look at them can help you decide which company to go with. Some companies may even have several options to choose from, which creates even greater flexibility for companies. Some common buy out options for the equipment include paying a nominal fee, paying fair market value, continuing the agreement, or returning the machines. Some companies also allow upgrading at this point in the agreement rather than sometime during the life of the lease. In some cases deferred payments may also be allowed, so be sure to understand all of the terms before signing on the dotted line.

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