FINANCIAL IMPACTS CASH PURCHASE LOAN LEASE Capital Requirements High. 100% of costs. Drains operations and reserve capital. Moderate. Down payment averages 25% of amount of loan. Minimal. As little as one or two months advance payments. Existing Credit Lines Decreased Liquidity. Increased cost of operating capital. Lower Credit Line. Resulting in less flexibility in short term credit needs. No Negative Impact. Represents an additional credit reference. Payments None. Entire cost is up front. Variable. May shift with changes in interest rates. Fixed. Locked in by the terms of the lease agreement. Taxation Deductible. Depending on the purchase. Partially Deductible. Only the cost of depreciation is deductible. 100% Deductible. In some cases leases are considered an operating expense.