Financing Options are now available from Penn State
with terms of 12 to 60 months, on select Instruments only:
1. TRADITIONAL FINANCING (BANK
Please Fax us the completed and
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.
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.
- 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
- 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.
- 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.
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.
- 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
- 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
- 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.
In general, more
interest is paid than in any other form of acquisition.