When you decide to get equipment for your company, you can opt to buy or lease what you need. Leasing is becoming increasingly popular as businesses look for the most affordable option these days. It is possible to lease anything from heavy machinery to computers and even to entire offices! You can lease anything that you need for your business, something that any cash-strapped business will appreciate. If you are just setting up your business, equipment leasing will help you to get the tools of trade that you like without a huge capital investment.
How to get equipment leasing
Equipment leasing involves accessing any items you need and paying for them at a monthly rate. The lender owns the equipment that is “rented” out to the business. In many cases, the company has the option to purchase the equipment at the end of the lease period. The lease agreement indicates the flat monthly rate that the business pays for a specific number of months. When the lease period expires, the company can choose to return the equipment, lease new equipment or continue leasing the equipment.
The benefits of leasing
There are several advantages of leasing business equipment and they include the ability to get the equipment needed without paying costly up front charges. The fact that the leases are not attached to bank loans means that the company’s lines of credit remain freed up. In most cases, the lease payments can be deducted in the company finances as a business expense. Another benefit is the chance you have to upgrade the equipment when the lease expires.
The downsides of leasing
While it is true that leasing can be very helpful regardless of the stage of development, it can also have some downsides. For a startup business, the entrepreneur will often be obliged to use his personal credit to secure the lease. Another downside is the higher price that the business will pay in the long term, and the fact that you are committed to keep the equipment during the lease period. This means that you might prefer different equipment but you are stuck with what you have.
What to know before leasing
There is a good reason why majority of businesses choose to lease equipment instead of buying. Whether you choose to lease all or some of your equipment, you will find this practice very useful. If you are trying to decide whether to buy or lease equipment, it is important to know that companies that sell equipment can refer you to leasing companies that they deal with. Before you make the final decision, make sure that you get quotes from several companies in order to make an informed purchase decision.
It is important to note that in some cases, the person making the leasing agreement may not be the source or owner of the equipment but a broker. It is a good idea to ensure that you deal with reputable financing sources. Choose leasing companies that have been around for longer. Also be careful when reading the lease terms, paying special attention to the casualty insurance that covers equipment damage. Last but not least, find out who is responsible for handling repairs and paying personal property tax.