Lease vs. Finance: What’s the Best Option for Equipment?
In order to take care of customers and be as successful as possible, it is important for business owners to get the right equipment. To do so, business owners must decide between renting potentially pricey equipment leasing or buying it. Here are the ins and outs of equipment leasing and buying.
The first option for procuring new equipment for your business is leasing it. There are both advantages and disadvantages to taking this route. Leasing often means you will have no down payment, or merely a small down payment, which can be helpful if you are just starting out. In many cases, leasing also does not require good credit. Another major advantage of equipment leasing is low maintenance costs since these sometimes-expensive repairs are often covered by the terms of the lease.
There are some disadvantages to leasing that should be considered as well. When you lease your equipment, often times prices are inflated, and in the long run, you could end up paying more than what the equipment is actually worth. You can also be limited in what you can do with the equipment since you do not actually own it. Finally, a lease usually comes with a contract that could be hard to get out of if your business falls on tough times financially.
If equipment leasing does not sound like the right option for your business, you may want to consider buying your equipment. Buying will give you more control over what can be done with the equipment since you will own it outright. It also means you can use the equipment as collateral for future loans or sell it if you need to. With buying, you may also save on the overall cost of the equipment in the long run.
As with leasing, buying also comes with some disadvantages. First, there is a bigger upfront cost. Usually all or a large chunk of the expense is due at the time of purchase. If you are going to buy with financing, an established credit score is generally necessary, which is not something a new business may have built up yet. Finally, if you buy your company’s equipment, you are solely responsible for the cost of upkeep and repairs.
As a business owner, you have options when it comes to equipment leasing and financing. Before you commit to renting or buying, it is wise to assess your business’s situation in order to help your venture be as successful as possible.