Is it possible to lease equipment with bad credit and preserve your business financially?
Handling finances is like walking a tightrope: one simple mistake or if you’re even a little off-balance, you’ve put yourself in a tough situation that’s difficult to get out of. All it takes a slight dip in your credit, and so many doors that could have been opened for you are closed, all because your score was reduced because of a financial mistake.
Many folks who are trying to become new business owners deal with these dilemmas firsthand because they can’t do anything without having decent credit, and a hard credit check will only make things worse for them. There are so many expenses that come out of running a business, from utilities and rent to employees and products, and the final expense of equipment (which is oftentimes one of the most expensive) is normally the breaking point where business owners get stuck in a pickle financially.
They want to be able to get the best hardware necessary for their business, but they can’t afford it without a loan of some kind, and with bad credit, that won’t be easily possible.
An alternative to purchasing equipment (which normally has too many downsides anyhow) is leasing equipment, but many business owners have heard the stories about bad leases and fear that the ramifications of getting a lease may be worse than the purchasing of equipment. So examining whether you purchase or lease equipment with bad credit, which is the better choice for your company?
How Purchasing Equipment can be a Liability
Many business owners do want to own their equipment- they already paid and worked for the ability to own their own company, and they want full ownership of the hardware that helps it work. However, many smart business owners have determined that buying all of your equipment simply isn’t feasible for a multitude of reasons.
Granted, you do get to claim equipment you purchase for a business as an asset, giving you some initial funding for the hardware you purchase. However, two major problems always arise with equipment, and when they do, the purchasing leaves you on your own.
Within a few years, most equipment will either break down to the point where it’s more financially wise to buy new equipment or become outdated to the point where your competition has the new toys that give them an edge over you. Any hardware that doesn’t break or become outdated for a while, like ovens or fitness equipment, is normally extremely expensive to the point where you are forced to get a bank loan, and this is where the bad credit becomes an issue.
The Factors when you Lease Equipment with Bad Credit
Many business owners try to lease equipment with bad credit because they can get a soft credit check and many leasing companies will not punish you for your credit score. After all, a lease is set up like a contracted loan, but as long as you pay the low, monthly payment, there’s nothing to worry about.
There’s no interest rate, you don’t owe a sum of money, it’s just you paying a rate every month in exchange for all the hardware you could need. The entire system is extremely useful and effective for business owners, because they can start their business without worrying about paying through the nose just to get equipment.
In addition, leases offer you the benefits of being able to upgrade your equipment if there’s a newer version, and you can get repairs for hardware if the equipment breaks down. It’s all set in the terms of leasing, however, leases are contracts that you agree to abide by, so making sure that you read the fine print and know what you’re getting into is vital.
Many business owners just jump into whatever lease is offered to them, only to fall into problems involving being overcharged, having a lease period too long, and more.
Making sure you do your research and get the best lease possible is important if you want to lease equipment with bad credit, because a good lease can be just the thing that turns your business around. To learn more about how you can lease equipment with bad credit, click here.