You have two options of acquiring laundry equipment for your business. You can either buy it or lease it. What are the pros and cons of laundry machine leasing?
Just like the car industry, businesses that specialize in selling laundry machines will consider offering lease options to potential buyers. There are also independent leasing companies that offer to lease laundry equipment if they specialize in this area.
Before you think of leasing laundry equipment, you have to consider how your lease is structured. A lease with minimum buyout at the end of the term will cost you almost the same amount it would when you acquire your equipment through purchase with financing. You should read the contract to ensure that the buyout price is not on the higher side at the end of your lease term.
Watch out for leases that include clauses that allow your lessor to increase the rate in future because the lease rate shown to you may only be a teaser. In the laundry leasing industry, all leases are capital leases. This means at the end of your lease term, you have the option of purchasing the equipment. Most leasing companies typically offer 5 year leases. With that in mind, what therefore are the pros and cons of laundry machine leasing?
What Are The Pros And Cons Of Laundry Machine Leasing?
It is much easier to apply for a lease than for a loan. This is because applying for a traditional bank loan requires a lot of paperwork and it takes time for your application to be reviewed. The approval process can take anywhere from three weeks to an entire month or more. Applying for laundry machine leasing on the other hand, is much easier and it takes at most 24 hours to get approved.
It is much cheaper to apply for a lease than to make a direct cash purchase or even apply for a bank loan. When making a cash purchase, you need large amounts of money and this means dishing out a considerable amount of capital to fund your equipment. Taking out your capital to fund equipment can put your business at a great disadvantage especially if cash flow is already tight. Applying for a loan from a credit union or a bank is also expensive because you have to make huge down payments.
You need to have a good credit score if you hope to be approved for a loan. When applying for laundry machine leasing, you can still get approved for a lease even with damaged credit. Most laundry equipment leasing companies have programs in place that help to cater to businesses with damaged credit. Moreover, leasing can help you increase your credit score provided your monthly lease payments are made on time.
Laundry machine leasing offers flexibility in the sense that your lease agreement is not written in stone. This means that everything on the lease can be negotiated starting with the terms of the lease to the rates being offered. Talk to your financial advisor or attorney to negotiate a better deal for you or to identify any loopholes in your lease agreement before signing it.
It is much easier to predict your monthly expenses when you lease laundry equipment. Most lease agreements include maintenance and repairs so that much is already covered. You won’t have to worry about how you are going to pay for repairs in case your laundry machine breaks down because your lessor already has that covered in the lease. When you purchase the equipment on the other hand, your monthly budget may fluctuate. Your machine might break down at any moment and you will have to cater for the cost of repair and maintenance.
As with other forms of financing, leasing laundry machines has certain disadvantages. For example, the equipment that you lease does not belong to you so technically you are paying for equipment that might not belong to you in the end. The good news is that most laundry equipment leases are capital leases that allow you to own the equipment at the end of your lease.
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After you have carefully considered the pros and cons of laundry machine leasing, it is time for you to approach several financing companies to negotiate the best terms and the best rates. You can do this by visiting LeaseQ.
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