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  • Writer's pictureDEROTTO Leasing

AN EQUIPMENT LEASE MIGHT MAKE MORE SENSE THAN A LOAN!

This statement refers to the callable nature of a loan compared to a lease. Outside of the tax consequences of a lease versus a loan, one of the other main reasons a business considers a lease to finance equipment is the callable clause or default clause under the contract.


The only time a lease is callable or in default is when a business stops making payments under the lease contract. This is a sharp contrast to a loan because a loan can be callable or in default even if the business is current with its payments under the loan contract. A loan can be called if the lending institution decides it is time to change its credit policies or the financial ratios of your business go outside the guidelines of the lending institution.


I can't begin to tell you how many times this situation has come across my desk over the years because their bank called their loan even though the business was current with all of its monthly loan payments. This type of situation can put a business in serious trouble - to say the least!

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