Financing:

The following Financing Options are now available from Penn State Manufacturing Co., with terms of 12 to 60 months, on select Instruments only:

1. TRADITIONAL FINANCING (BANK LOAN)
2. LEASE

Please Fax us the completed and signed Financing Application (click here to download) to 302-449-3315 or 801-848-6565 in order to be considered for one of our financing plans.

Which financing option is right for you? Let's compare the two different options that are available from Penn State Manufacturing Co.

1. TRADITIONAL FINANCING (BANK LOAN)

In this method of purchase, a lender provides funds for the purchase, and generally obtains some form of lien or other encumbrance on the equipment until the funds have been repaid.

Advantages:

  • Direct Ownership

  • Depreciation write-off
  • It does not deplete cash flow. Usually a 10% or 15% down payment of the total purchase price is required. In many cases, the income generated by the equipment can exceed the payments.
  • Funds not expended for a cash purchase can possibly earn a higher-income yield than the interest rate of the loan.
  • Appropriate when bank lines are never utilized.

Disadvantages:

  • Interest rates may be high. Payments may be variable.

  • May require: compensating balances, downpayment, origination fee. The downpayment may be high.
  • The equipment is encumbered by a third party unless the funds are borrowed from a source other than a financial institution such as a pension fund.
  • Appears as additional consumer debt on principal's consumer profile.

2. LEASE

Leasing offers an alternative to Traditional Financing. A lease is a contractual arrangement in which a leasing company (“lessor”) gives a customer (“lessee”) the right to use its equipment for a specified length of time (“lease term”) and specified payment (usually monthly). Depending on the lease structure, at the end of the lease term the customer can either purchase, return, or continue to lease the equipment.

Advantages:

  • Leasing provides 100% financing. Generally no downpayments are required, and all costs associated with a purchase can be included in the lease, including delivery.

  • Leases are often supported by the equipment manufacturer, which can lower the interest rate or the residual payment (the amount required to attain ownership of the equipment at the end of the lease term).
  • Leasing conserves working capital. Leasing leaves lines of credit at other financial institutions free for cash-flow purposes, investments, unsecured loans, or unexpected emergencies.
  • Leasing overcomes budget limitations. Most companies are hampered by capital budget limitations from time to time. Leasing allows businesses to acquire new equipment with easily affordable rental payments. Leasing can give you the ability to obtain more purchasing power from a given amount of available cash.
  • Leasing provides security against equipment obsolescence. Upgrade and trade-in options can easily be added to a lease agreement. In addition, there are no risks of equipment ownership, and lessees will never be required to resell or remarket obsolete equipment.
  • Leasing can offer tax savings. When properly structured, monthly lease payments may be fully tax deductible as an operating expense. This savings results in a lower after-tax equipment cost. Contact us to discuss tax advantages applicable to your specific situation.
  • Payments are a fixed cost. Monthly lease payments remain the same for the life of the lease, even if interest rates do not.
  • Leasing provides a faster return on investment. Revenues or savings created as a result of the equipment during the first month often will be in excess of the monthly lease payment, thereby providing an immediate return on investment.
    It is important to note that the common thread in each of these benefits is flexibility. Lease payments and terms may be structured based on a business’s particular need. Equipment leasing can be an extremely valuable financial tool for growing businesses while staying competitive in today's marketplace.

Disadvantage:

In general, more interest is paid than in any other form of acquisition.