How and why to Lease Equipment Instead of Buying?

Purchasing equipment can be expensive, and it may not be possible for all small businesses to buy everything they need upfront. Here is when equipment leasing comes into play. It is a way to spread out the cost over a set amount of time. You will not own the equipment and you will not have to worry about depreciation. In the case of commercial equipment leasing, you have to pay a fixed rate for a certain amount of time. The fees and interest are included in the payment. Contracts of equipment leasing usually run for three, seven or ten years. If you are considering leasing equipment for your business, you have come to the right place to find out how and why leasing equipment is better than buying in various aspects.

Why Lease Equipment?

Since buying and maintaining equipment can be very expensive. Maintaining and upgrading equipment can be very costly as well. This is why most small business owners choose to go for equipment leasing to forego the high costs involved in buying and maintaining equipment. Leasing comes with various advantages that purchasing does not. This includes lower monthly payments, which are usually spread out over months or years instead of a payment of one lump sum. A lot of commercial equipment leases also consist of service add-ons or service agreements, eliminating the need of in-house technicians.

If your small business needs new equipment or technology but cannot afford it, leasing is the best option. Leasing gives you the ease of making smaller monthly payments, generally over a multi-year period rather than paying it all at once. At the end of your leasing contract, you can also return the equipment or buy it for a cost that factors in appreciation and how much you paid over the life of the lease.

Advantages Of Equipment Leasing

1. A lot of lessors do not require a significant down payment.

2. If you need to update your equipment regularly, leasing is an excellent option because you will always have the latest equipment

3. If your business requires upgrading to more advanced equipment to manage a higher volume of work, you can easily do so without having to sell your current equipment and shop for replacements.

4. Equipment leases are usually eligible for tax credits. Based on the lease, you might be able to reduce your payments as a business expense.

How To Lease Equipment?

Before getting started with the procedure, answer the following questions to help you make the right decision on leasing equipment.

1. What Is Your Monthly Budget?

Leasing provides the opportunity for lower monthly payments than buying. Start with what you are able to afford and work from there. If you need equipment that you are not able to afford, the next best option for you is to get in touch with equipment finance lenders.

2. How Long Will the Equipment Be Used?

In the case of short-term use, leasing is always very cost-effective. If you are using the equipment for more than three years, a loan or standard line of credit will be more advantageous than a lease. You must also factor in the growth of your business, i.e., if your company is growing rapidly, a lease will definitely be a better option than purchasing.

3. In How Much Time Will the Equipment Become Obsolete?

Technology becomes obsolete more rapidly in some industries than others. Make sure to consider this aspect before deciding whether leasing makes sense for you or not.

There are numerous ways to finance a lease. If you are planning to lease equipment for your business and you want to do so with a loan, give Vendor Lender a call, as it is a great company for heavy equipment financing in Canada. Even though Vendor Lender provides finance solutions mainly for restaurants, they are also into manufacturing equipment financing.