How do Open Equipment Leases Work for a Business?

What is the difference between open equipment leases and standard leases?

open equipment leasesAll companies need some sort of edge to keep ahead financially, whether they’re saving money one way or earning money in another. It’s important that businesses spend as little money as possible while providing the best service to make the biggest possible profit.

This can be fairly challenging though considering quality is not cheap, and businesses have so much they need to pay for. From hiring enough employees to run your business effectively to making sure your stock is desirable by customers, companies have to spend a lot of money to run their business successfully.

However, with such limited capital it can be incredibly difficult to afford everything, which is why finding ways to save money in the long run can be very useful, especially as far as your bigger expenses.

Many types of businesses have to spend quite a bit of money on equipment for their success of their business, because not only do they need a lot of hardware but they need only the best of the best as far as hardware.

One of the best ways to do so is through getting an equipment lease, allowing you to spend much less on your more expensive hardware while getting some of the best equipment possible in your business. Leasing is an effective alternative for business owners, saving them quite a bit of money, but there are different kinds of leases business owners can get, like open equipment leases.

The question is, how do open equipment leases work in comparison to standard leases, and how can business owners get the best possible setup for their business?

Leasing Equipment for your Business

There are many reasons for business owners to get an equipment lease, mainly through the benefit of not having to deal with the negative responsibilities of owning equipment. With leasing, you don’t actually own the equipment because you are paying for the service of having hardware in your business no matter what.

All you do is a pay a monthly fee and equipment is guaranteed to be in your business and running for the duration of the contract period. That monthly fee is both low and flat, meaning you don’t have to deal with any large payments or devastating interest rates.

Throughout the equipment lease, business owners get the ability to get equipment repaired in case anything breaks down, and they also get tax benefits as well. Tax benefits vary every year, but they essentially put money in your pocket come tax return time at the beginning of the year.

Plus, leasing can mean you get upgrades, either throughout the lease or at the end of a lease if it is renewed. Once a lease is completed, you can choose to renew it and get that upgrade, purchase the equipment at a haggled rate, or return the equipment.

There are countless benefits to getting a lease, but it is possible to get a less than ideal lease for a business considering a lease is a pre-determined contract. If you want the best leasing contract, you need to know what you want as far as lease rate, contract period, and other factors of the lease, and then shop around until you find the best possible lease.

How do Open Equipment Leases Work?

There are different advantages to open equipment leases, mainly because they depend on how equipment is initially appraised and how much money you can spend on the equipment.

Open equipment leases work the same general way that standard leases work; you pay a flat monthly rate and get equipment loaned out to you.

The difference is that with an open equipment lease, the hardware is appraised initially to determine the depreciation value at the end of the lease. If the value is higher or lower than the actual appraised value at that time, you are either paid and get to purchase the equipment or have to pay and then get the equipment.

In other words, say you buy equipment that is appraised to be at $5,000 by the end of your lease. At the end of the lease, the equipment is appraised again; if it’s appraised at $6,500, you are paid the difference of $1,500. If it is appraised to be less than the $5,000, you owe that amount of money.

Open equipment leases work a little differently but have many similarities to standard, direct leases, and they all depend on what you want for your business. To learn more about open equipment leases, click here.

Permalink