Are the lease interest rates for office equipment better than loan interest rates? How should you get your company’s equipment?
Starting a business can be one of the most expensive ventures out there simply because it takes so long to break even, never mind make a profit. In other words, most businesses start up on personal capital and some form of a loan, and then they work ridiculously hard to make sure their business is as perfect as possible.
As a new business, your first impression on the world is critical, from the people you hire to the services you provide, which is why how you choose to set up your business initially is vital. Most of starting up a business is allocating funds; just about everything you need costs money, and you need to be able to afford everything you get and get loans for the stuff you cannot afford.
Many business owners prefer to minimize their loans as much as possible so they can avoid acquiring debt, but there is a unique type of loan built for businesses, old and new alike. Leasing is an equipment loan in its essence, and it works much differently than a bank loan.
Knowing which is the better option for your business can be very helpful to you in the long run. So, in the case of a common type of equipment needed like office supplies, are the loan interest rates or lease interest rates for office equipment more manageable for a business?
Purchasing Equipment with a Bank Loan
When purchasing equipment for a business, it’s clear that you’ll need a wide variety to make your business work, and the price range could vary greatly.
For instance, in an office, you’ll need equipment like keyboards and smaller office supplies that may be fairly inexpensive to get, but you’ll also need computers and desks and such, and that’s where the bulk of your spending will lie.
As far as purchasing goes, just buying the inexpensive stuff usually isn’t that big a deal; despite everything else you have to pay for, you can easily afford it and you don’t have to deal with contracts and such in the process.
The question is, why wouldn’t you just purchase some of the more expensive equipment if you have the funds and you want to avoid some kind of loan?
Loan Interest Rates for Office Equipment
Purchasing heavy duty equipment is an extremely risky measure in the long run, simply because if and when it breaks down, you need to pay full price again to replace it. In the case of computers, that can happen within a few short years, and in an office environment where you require quite a few computers and they’re constantly being used, paying to replace them can be quite a headache.
Your business will not be a success overnight; it will take time to grow, and having equipment break down in this period is very dangerous for your company. This can be made worse by a bank loan; loans are something you should only get if you know you can pay them off relatively quickly.
If you take a loan on more expensive equipment when your business is just starting and you know that you can’t pay for it for a while, that loan interest rate will just keep accumulating debt for you to pay for.
If your equipment breaks and you still haven’t paid for the loan, then you’re that much more in debt.
Lease Interest Rates for Office Equipment
Leasing is considered an equipment loan, but luckily, it acts nothing like a loan. In fact, leases are designed specifically to meet business’s needs, whether they’re just starting or are relatively experienced company.
With a lease, you pay a low, flat monthly rate for the hardware for a pre-determined contract period, and the equipment’s all yours. During the lease, you can get hardware repaired if it breaks down as well as upgraded depending on the terms of the contract.
At the end of the lease, you can choose to continue the lease with an upgrade on your equipment or you can purchase the equipment at a haggled rate. Lease interest rates for office equipment and all other equipment are zero, meaning you don’t have to owe money to anyone, and you don’t have to pay high fees.
The trick with leasing is that the devil’s in the details, meaning you need to make sure that contract is up to your standards before you agree to the lease. Leasing deals are designed for all sorts of businesses, and as long as the lease specifications are suitable for you, you can get all of the equipment you need without having to pay so much of your initial capital.
To learn more about the lease interest rates for office equipment, click here.