How can the importance of restaurant equipment leasing rates not be heavily emphasized during the acquisition of equipment for your restaurant? There are plenty of reasons behind this.
Lessees have to understand that while looking for a leasing company with the most competitive rates is important, there are also other factors that they must factor in. Leasing has been around for many years. It is clearly one of the most viable methods of acquiring equipment for sales growth and profit. The key thing that you have to realize is that equipment leasing encompasses all types of kitchen equipment ranging from coolers, grills, coffee making machines, etc. So now that it has already been established that leasing is important and it is available to everyone who owns a restaurant, why therefore aren’t restaurant equipment leasing rates that important?
Reasons You Shouldn’t Overemphasize The Importance Of Restaurant Equipment Leasing Rates.
One of the key reasons why you should not place that much emphasize on the importance of restaurant equipment rates is the fact that there are many other financing options that you should consider before settling for leasing. While restaurant equipment leasing might seem like the best available option, it is not the only option. This is why you should do your homework and find out if leasing is better than buying or taking a loan from a credit union or a bank.
If your restaurant is doing well and you have sufficient cash flow, then you should consider purchasing equipment that does not need to be replaced or upgraded every so often. This can include kitchen equipment such as coolers, fridges, furniture, grills, etc. As a rule of thumb, you should only purchase equipment that appreciates in value; if it depreciates, then you should lease it.
Are There Any Risks Involved In Restaurant Equipment Leasing?
There are also risks when it comes to leasing restaurant equipment. For instance, you might end up with the wrong lease. A capital lease allows you to own the kitchen equipment at the end of your lease term. You can purchase the equipment at $1, or at fair market value. This is suitable for equipment you plan to use for a very long time or equipment you wish to own. This type of lease is much more expensive and requires you to have a large amount of capital. The operating lease on the other hand is much cheaper but you do not get to own the equipment at the end of the lease. You can however, renew the lease for another term.
Lease financing might also not be the best method for you to acquire equipment if you and the leasing company borrow at the same rate. Yes, leasing companies sometimes borrow to fund their deals. Since the leasing company has to make a profit, their rates might be higher.
You could also attract high restaurant equipment leasing rates because of your credit score. A person with a credit score of 300 points will get a higher rate than the person with a credit score of 750. This is because leasing companies look at your ability make monthly lease payments and will charge you a higher rate to mitigate the risk as compared to how they would charge a person with a higher credit score.
Speaking of credit score, it could easily go down especially if companies do a hard credit inquiry. If you are thinking of sending several applications to different companies just to try your luck as to which equipment leasing company will be willing to lease to you at the lowest rate, then they could all do a hard credit inquiry and this could hurt your credit score. Soft credit inquiries are the best and the best place to start is at LeaseQ. LeaseQ is the leading source of one of the top financing companies in North America. They only do soft credit inquiries so you do not have to worry about any impact on your credit.
Summary
The next time you wonder what’s the importance of equipment leasing rates, consider the risks that come with leasing restaurant equipment and how to avoid them. Remember that while comparing leasing rates is important, it could hurt your credit score in the long run. You should go for a lease that is flexible, allows you to make payments in a fashion that makes sense and gives you and of term buy out options.
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