Whilst paraphrasing Shakespeare may seem a little sublime when discussing lease/financing, the question really does apply.

If you can lease/finance a piece of equipment for $500 per month, and that piece of equipment will earn you $5,000 per month, then obviously it will pay you to lease the equipment. Lease/financing gives business owners an additional line of credit to acquire more equipment, and provided the equipment either saves or earns more than its cost, it makes good sense to lease the equipment. And leasing also allows the business owner an additional line of credit to acquire the equipment that they really want, and to not try and get by with a "cheap" piece of junk that may prove to be unreliable and costly to maintain.

It's also extremely important to investigate your equipment supplier before making your final buying decision. Remember that all reputable leasing companies are going to check out the suppliers before approving the deal.

If your looking to buy an espresso machine, how long has the dealer been in the espresso machine business? A few years ago, there were only a handful of dealers in a given market, and now there are nearly ten times as many "suppliers". Last year, some of these companies were selling slush machines, and next year they might be selling satellite dishes, but this year the craze happens to be for espresso machines!

Now while your initial purchase price may be less with a transient ("fly by night") operation, you will undoubtedly have trouble with warranty and service once this supplier has moved on to its next "get-rich-quick" scheme. Buying a quality piece of equipment from a reputable and established supplier will save you money, (not cost you extra money and headaches with operating and maintenance problems). And the difference between the "il cheapo" machine, and the quality product that you really want may be less than a cappuccino per day.

Also, be sure to check with your accountant first, but when a lease has at least a 10% buyout at lease termination, the monthly payment will probably be 100% tax deductible. This means that you may write off the cost of the machine quicker than if you had to use the depreciation rules. A usual lease term is for 36 months, but be certain that you don't sign an excessively long term commitment since the lease could last longer than the equipment it is financing.

A leasing company will usually require only the first and last payments upon delivery, however if your credit report shows that you are human and you have a few hiccups (as most people do), you may be required to also pay the buyout at lease inception, rather than at lease termination.

Make sure that the buyout provisions are clearly spelled out, and this may be in an accompanying letter rather than written on the lease itself. The three usual buyouts are as follows:

1. FMV (fair market value), this is one option where you must request the leasing company to explain (in writing) their policy, otherwise you could easily end up with a very high buyout.
2. 10% - this will be 10% of the initial purchase price. For example, $100 for a $1000 item.
3. $1.00 - this means that you own the equipment at the conclusion of the lease with no additional payment. This lease may NOT be tax deductible.