How can businesses take advantage of equipment leasing rates when acquiring their hardware?
All businesses need some kinds of equipment to be successful, no matter what they do. You could be running a restaurant or managing a delivery service or in charge of a fitness center, but the main factors are the service you offer and the profit you make.
Most businesses’ level of profit is directly associated with the quality of equipment they use, but getting quality equipment at a decent rate is another matter entirely. For example, fitness centers need quite a few different parts of equipment to run, and each one of those can cost up to thousands of dollars, money you may not have.
Whether you’re business is just starting or has been around for a while, you may have an equipment need and are looking for effective solutions. Businesses do have options as far as how they get their equipment, whether they use an equipment lease or choose to take out a bank loan and get some funding to buy their equipment.
Examining the options businesses have, which is the better option? Is equipment leasing rates and the factors of leasing worthwhile for a business? Or are companies better off just getting the bank loan and buying their hardware?
The Facts about Getting an Equipment Lease
Many businesses prefer having a lease on at least some of their equipment because they can still pay for their equipment, but in a manageable way. With an equipment lease, business owners get equipment loaned out to them in exchange for a flat, monthly rate.
Equipment leasing rates are both low and have no interest built on them, meaning you pay the same amount at the start of the lease as at the end of the lease. Plus, the equipment leasing rates are much easier to pay as far as monthly fees versus paying a large, up-front payment on equipment.
Leasing has other benefits throughout the contracts as well, depending on the lease you get. For example, you can get tax benefits on leasing, putting money in your pocket every year.
Most leases have some kind of repair setup in them, meaning you can get equipment repaired if it breaks down without paying to fully replace the equipment, a significant advantage compared to purchasing.
Many leases also have upgrade deals in them, so if you have a long lease or are renewing a lease, you can get upgraded equipment for your use in your business.
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Purchasing Equipment for a Business
Many business owners don’t want to deal with a lease and want to actually own their equipment, so they stick with purchasing. Some scrap the funds together and pay out of pocket, while others get a bank loan and end up purchasing the equipment that way.
Either way, purchasing has its advantages and disadvantages, mainly because owning equipment isn’t always beneficial. If you’re running a restaurant, some equipment you purchase to be used in the kitchen will last longer and be less of an issue than others.
Most of your smaller equipment (utensils and such) are fairly durable, simple pieces of equipment that you can easily pay for and replace whenever they break down. However, when it comes to your oven or stove, complex machinery constantly being used, everything changes.
Equipment like that is complex and there’s a guarantee that something is going to break down with it within a few years, and that means paying that large sum of money again to replace the equipment.
Especially for newer businesses still trying to get on their feet, paying for important machinery in their business twice within a few years can be extremely detrimental, and a bank loan can make the matter worse depending on the interest rate.
Equipment Leasing Rates Examined
There are advantages and disadvantages to both leasing and purchasing, which is why most businesses will generally do a little of both. However, leasing seems to be the more effective option for getting capital equipment, because equipment leasing rates are much easier to handle than paying a large sum of money for equipment that’s just going to break within a few years.
That being said, leases are designed for a wide variety of business types, meaning not all leases are ideal for your business. Some leases work better for newer businesses, while others work better for older businesses.
It’s really just a matter of preference on what you want out of a lease, but last thing you want is to get a lease where the equipment leasing rates are too much to handle or the contract period is too long or short.
It’s best to have an idea of your ideal lease before you sign the dotted line and get a lease, because a good lease can end up being a huge asset for your business. To learn more about equipment leasing rates, click here.