Equipment Leasing: Weighing the Pros and Cons

Leasing equipment for your business needs is an attractive option because it helps you relieve the strain on your resources with a large, one-time expense. But you have to understand that the option of leasing does not apply for everyone, so you have to weigh its pros and cons before making a period to your decision.

Pros of Equipment Leasing

  • Leasing offers you less upfront cost for equipment expenses. Equipment leasing allows you the benefit of spreading out your expenses. Instead of buying your equipment and owning it, leasing allows you to have monthly payments to your chosen rental equipment company to use the equipment for a certain period of time.
  • Leasing equipment allow easy upgrades to better models available. Rather than buying your own equipment and having to worry about the cost, you will make to upgrade it, leasing allows you to upgrade your leased equipment to better models. When you sign a leasing agreement meant for a two-year term, you can then trade in your old model and upgrade to the new one after the end of your lease plus you will not have to sell the equipment since you do not own it.
  • Leasing equipment offers greater flexibility than other options. Leasing for equipment is useful especially when you want to buy a piece of equipment that you are not sure you are going to need for a long-term. Since you cannot predict what the future holds, sometimes you need things now that may be useful later. Leasing an equipment provides you the flexibility because you can get rid of it whenever your term ends especially when it becomes unnecessary for your business.

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Cons of Equipment Leasing

  • You don’t own the equipment. You will not get the benefits of tax saving as with owning an equipment when you lease for it and the value of the asset is not on your book. This might scare off your clients as they see that your lease is a liability.
  • You’re paying an amount of interest. You will still pay for interest if you lease an equipment although it may vary and run around 5% APR, unlike buying it, you avoid paying interest though but you might face a potential disruption to your cash flow.
  • Equipment leasing gives you limited access to new businesses. Especially if you are yet starting your business, an equipment lease may need you to pay more upfront or provide other concessions to the lessor to get the deal done.

Equipment lease depends on the financial situation, terms, and conditions of your business. Always look for an equipment company, Strongbox, that can offer more pros than cons.

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