Business Basics

Leasing and Buying Business Equipment

Getting Started With Equipment Leasing

Equipment is a very important part of a business. If you are in need of new equipment but are unable to afford an outright purchase, you should consider leasing. Leasing is a very popular method that businesses of all sizes use to keep equipment and technology up to date in an affordable way. In addition, a lease will typically not require a large down payment, so it allows you to keep your cash and use it for other investments.

Consider Your Budget

What’s your monthly budget? While equipment leasing offers lower monthly payments as compared to financing a purchase, it is still important for you to evaluate your budget for the entire lease or finance period. An increasing budget may allow you to pay off a purchase early and own the equipment, while a stable or lower budget may favor leasing.

Short-Term Leasing

How long will you be using the equipment? If the use will be short-term, equipment leasing will probably be the most beneficial, cost-effective way to go. Once the lease term has ended, you simply return the equipment to the leasing company and consider leasing newer equipment. However, if you plan on using the equipment for a very long time it may be best to consider a purchase loan.

Duration of Usefullness

Will the equipment become obsolete quickly? Things like technology tend to become outdated quicker than other kinds of mechanical equipment. If you feel that the equipment you need should be updated often, equipment leasing will probably make sense. Business equipment such as computer-operated machinery easily fall under this category.

A Case for Leasing

Make a full evaluation of your business’s situation, and the equipment’s usefulness and life expectancy when considering an equipment lease or financing a purchase. You can draw up a comparison sheet to help you evaluate every detail of each option factor. In most cases, an equipment lease is better.