When looking at the advantages and disadvantages of equipment leasing, how should you acquire your equipment?
Everyone’s got their own trade, whether they’re a carpenter, plumber, engineer, or doctor, and at some point, each and every one of us has a chance to take our level of experience to the next level and become our own boss. It doesn’t matter whether you’re a doctor looking to start your own clinic or a truck driver starting your own delivery business; it’s a fact that running a business requires quite a bit of experience in your own field as well as some additional knowledge.
Running your own company involves skills and work in areas that you may have delved into but are not experienced with, like dealing with your own employees or marketing or keeping track of your own finances. You need to make sure your business is a well-oiled machine, with as much going right as possible and every available edge being taken advantage of.
For instance, if you have a good way to increase your marketing and advertising and potentially gain customers, you absolutely need to look into it and compare it to the cost. Of course, running a business is all about the research in the sense that comparing pros and cons could mean the difference between a smart choice and a liability for your business.
A common example is how you acquire equipment; many business owners have stated that they lease either a percentage of their equipment, but why? What are the advantages and disadvantages of equipment leasing?
Pros of Leasing your Equipment
There are both advantages and disadvantages of equipment leasing, but one of the big factors is the way you pay to get the equipment. Many businesses grow frustrated with using up so much of their capital on their equipment, only to pay that same amount a few years later when the equipment breaks down or becomes outdated.
In addition, some company owners are forced to get a loan to accomplish this, and if they end up loaning a lot of money or have bad credit, that interest over time is guaranteed to skyrocket and accumulate quite a bit of debt that businesses struggle to pay off. Companies need an effective way to get their equipment without having to deal with such heavy financial blowback, especially right when their business is starting, and leasing accomplishes this.
With an equipment lease, you pay a low flat monthly rate to have the equipment rented out to you, meaning the payments are manageable and do not change over time. Many business owners don’t like the idea of renting the equipment that runs their business, but with a lease you don’t have to deal with consequences of the equipment wear and tear; leases have a repair setup built into them.
This means if, for any reason, your equipment breaks, the leasing company repairs or replaces it as stated in the leasing contract without you having to pay that full sum to replace the hardware. In addition, many leases have an upgrade option throughout or at the end of the lease, meaning you get the best new equipment possible over time and don’t end up outdated.
Advantages and Disadvantages of Equipment Leasing Compared
One of the main issues business owners come across with an equipment lease is that they want to own the equipment and don’t like the idea of renting equipment. Of course, many leases give you the option to purchase the equipment at the end of the lease, but the advantages and disadvantages of equipment leasing depend completely on the contract.
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This is where many of the problems arise; business owners will not do their homework, get a bad lease, and end up in serious trouble. If you get a subpar lease, you could end up paying a monthly fee that you thought was too high for equipment you don’t need for far too long a time, and then you have to deal with cancellation fee.
The workaround to this is fairly simply: get a lease that’s good enough that you don’t even have to care about that cancellation fee; there’s really no such thing as a bad lease, only a lease that’s more suitable for one business over another. Don’t forget, many types of businesses lease the same equipment, and older and newer businesses will have their leases set up differently.
The best move is to have an idea of what you want out of a lease within reason and go shopping for that lease, and don’t settle until you find it. To learn more about the advantages and disadvantages of equipment leasing, click here.