Everything You Need to Know About Equipment Leasing
When you need to acquire equipment for your business, you have two options: buying or leasing. While you may think it would be better to own your equipment, there are many benefits to leasing as well.
Here are a few questions and answers that might help you determine whether or not equipment leasing is the best move for your company.
1. What Is Leasing?
When you lease your equipment instead of purchasing it, it means that the owner of the equipment is simply lending it to you. Essentially, you are renting the equipment. You will pay a set price for the duration of the lease which will allow you to use the machinery for your business. After the lease ends, you may decide that you want to continue the contract, or you might decide that it’s time for an upgrade. In some cases, you could have a rent-to-own agreement and acquire ownership of the equipment after the lease is up.
2. When Should You Lease Your Equipment?
Equipment leasing can be particularly useful for companies who are just starting out and don’t have the available funds to purchase it. Even for many established businesses, a leasing arrangement can be more beneficial than purchasing equipment. This is especially true in industries such as medicine where technology is rapidly moving forward and being stuck with an old machine could severely affect your ability to stay current.
3. What Are the Benefits?
One benefit to using equipment leasing instead of choosing to purchase machinery outright is that it is easier to upgrade when you have a lease. If your equipment is outdated, you could lose money as well since it will be more difficult to find a buyer for old machinery. Leasing also allows you to save money on services such as maintenance as the owner will often be responsible for paying certain costs. Another big benefit of leasing is that it allows you to use working capital that you might have spent on purchasing equipment on other areas of your business.
Although it may sometimes be beneficial to your business to purchase the equipment that you will be using, in some cases equipment leasing is the better option. It can make it easier for you to upgrade in the long run if technology has rendered your equipment obsolete or if it has become worn and less efficient. Consider this option the next time your company requires new equipment.