Depending on the type of business you’re in, and the kind of equipment you need for that business, leasing may make the most sense in terms of acquiring whatever equipment you need. As an example, if you are thinking about opening up an office and hiring a number of employees who will need computers, leasing may provide you with a better option than purchasing those computers outright. Because leasing is such a good tactic to avoid obsolescence, something like 80% of all US companies lease some or all of their equipment.
Advantages of leasing
One of the biggest advantages of leasing is that you don’t own the equipment, and that means you don’t necessarily have to carry out any maintenance or repairs to keep it operating at its best. You should also have lower monthly payments than if you were to purchase the equipment and own it. Your interest rate should be lower on the equipment, so it becomes more economical. Then of course, there’s the obvious fact that you don’t have to invest a ton of cash in purchasing the equipment, but you can make more business-friendly payments each month, which only require much smaller repayments. Many businesses prefer leasing because it provides them with access to the most modern tools and equipment, as opposed to being stuck with equipment that becomes obsolete after you’ve owned it for years.
Disadvantages of leasing
Leasing any equipment will always require a two or three year commitment, and for some businesses which might experience rapid changes, this can be problematic. Over the duration of your lease period, you can expect to pay more money for the equipment than if you had purchased it outright, so you may not get the best financial advantage from leasing. One other drawback to leasing equipment is that since you don’t own it, you don’t have the right to make any modifications to it whatsoever, and you would be obliged to request the equipment owner to do that for you.
Interested in leasing equipment for your business?
For some business owners, leasing is a better option because you don’t really want to own the equipment outright. If you’re interested in leasing, contact us at First Source Capital to discuss some potential solutions.