How does the leasing restaurant equipment cost stack up against purchasing rates? How should you get your restaurant equipment?
This is especially the case when you’re starting a brand new business, because your capital is so limited and there is so much you need to pay for when your business starts.
From acquiring a building and furnishing to hiring employees and paying for licensing and fees, your new restaurant already has so much to pay for, and equipment can be another huge add on to your company.
Being able to reduce expenses is important in a business, but how can you do so without getting lower quality in the things you purchase?
The answer is finding a way to get your equipment without having to pay everything up front through either leasing or taking out a loan. But, comparing the leasing restaurant equipment cost with loan rates to pay for equipment, which is the better option for your company?
Buying your Restaurant Equipment
Of course, there is some equipment you’re better off with just flat-out purchasing, mainly because the equipment is low cost enough that purchasing and maintaining it is no issue. Plus, purchasing does have its benefits as far as getting to claim the equipment as a business asset, giving you the funds to cover part of whatever you buy.
Plus, as that equipment deteriorates to the point where it loses its quality or breaks down, repair and replacement aren’t really a financial issue. However, things get more challenging when it comes to the more expensive hardware a restaurant needs, like ovens and burners and such.
This hardware is not only costly as far as the initial purchase, but also needs to be maintained heavily over time. Plus, when that equipment breaks, repairs are so expensive for you that it’s normally just better to replace it, meaning you have to purchase the hardware again.
This is not good for a start up business, because for the first few years, finances are tight, and having to drop money on equipment again is detrimental for your business.
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Getting a Loan to Purchase your Hardware
The issue of purchasing your equipment can be made worse with a loan, depending on how high of a loan you take. Loaning involves you borrowing funds in the hopes that you will pay off the loan with interest depending on how long it takes you to pay for the loan.
No matter how long it takes you to pay for the loan, if you loan a high sum of money, the interest rate is going to be high, meaning you will owe more and more over time. Plus, if your equipment breaks down and you need to purchase it again, you get set back on paying your loan for that much longer.
That’s why, with loaning, it’s recommending you only loan an amount you know you can pay in a reasonable amount of time.
Leasing Restaurant Equipment Cost
Unlike loaning and purchasing, which involve you paying a full sum of what you owe at some point, leasing involves a rate over time, which is normally much more manageable. Leasing does not mean you own the equipment; you only get the equipment loaned out to you in exchange for a flat, low rate, so interest rates are zero.
The leasing restaurant equipment cost is normally very low and easier for newer businesses to handle, but there are, of course, other benefits of leasing. Ownership isn’t always the best move because hardware breaks down over time and never lasts; but with leasing, repairs are handled for you.
Instead of paying a huge amount to repair or replace the equipment, the leasing business does all of the repairing for you without having to pay so much. In addition, leasing allows you to get an upgrade come the end of the lease, or depending on the lease, so much sooner, meaning you have the most up-to-date equipment possible.
At the end of a lease, you get to choose whether you want to continue the lease with an equipment upgrade, return the equipment, or purchase the equipment at a haggled, reduced rate. To learn more about leasing restaurant equipment cost, click here.