What does leasing do for a business? Why should I lease equipment instead of purchase it?
All businesses need to be able to make as much of a profit as possible, but doing so is another matter entirely. Companies oftentimes have so many expenses to deal with and such limited capital that they end up being lucky just breaking even.
From affording to hire all of your employees to paying for stock and a building and the utilities attached and the other fees and expenses attached, paying for everything in your business can seem like an impossible task. Luckily, there are ways for companies to reduce on their expenses without reducing the quality of their business.
After all, you don’t want to pay less for your location if it means dealing with a subpar location; you want the best for your money’s worth, and you can get that with equipment leasing. Many business owners want to know why should I lease equipment.
They don’t want to have something loaned to them, and they want the ability to own their equipment. However, when comparing leasing to purchasing your equipment, it’s clear that owning your equipment is not always the most effective option.
Owning your Company’s Equipment
Purchasing your own equipment always has its own advantages and disadvantages that completely depend on what equipment you are purchasing. For instance, less expensive equipment is much easier to purchase, maintain, and eventually replace, especially considering it’s generally a little more durable.
Sometimes even expensive equipment can be manageable because you can claim the equipment you purchase as a business asset and get some funding for it.
However, the responsibilities of owning equipment can be too much for a business to handle, especially when your company is just starting and is still tight on finances.
For example, think about personal purchases you may have made for your home, like buying a computer or a refrigerator. Of course, both of these are considered expensive pieces of hardware that are fairly intricate and complex, but the initial purchase isn’t so bad because you’re only buying one.
After a few years, deterioration begins to set in, and the hardware becomes in need of replacement, which of course you follow through with.
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Downsides of Owning Equipment
It’s no issue because you’re paying that amount for one piece of equipment every few years, but for a business it’s another matter entirely.
You’re generally paying for a lot of equipment for your business, and having to pay for all of that equipment every time it breaks down every few years can be a difficult load to manage financially.
Some company owners get a bank loan because they believe that will help them manage their financial situation easier, but that’s not always the case considering the interest you have to pay.
An interest rate is a percentage of the amount you loan, and if you’re loaning a large sum of money, your interest will be high no matter how small the percentage is.
Plus, what happens if you haven’t paid off a loan and you need to replace your equipment? You just sink your business deeper into debt off of just affording the equipment in your business.
Why Should I Lease Equipment?
There are countless reasons why business owners should take advantage of an equipment lease, but it all boils down to responsibility of equipment. Many company owners want to know why should I lease equipment when I can just purchase it, but there is no specific advantage to owning your equipment.
Generally equipment you buy for a business will not last long, and owning equipment means you have to take full responsibility for the hardware and deal with anything that goes wrong.
With an equipment lease, you pay a flat monthly rate to get equipment loaned out to you, meaning you don’t pay any large payments up-front.
With leasing, you aren’t paying for the equipment but rather for the service of having hardware in your business at all times, which is why leasing companies repair equipment for you.
Leasing means that you don’t have to deal with the negative side effects of owning equipment while getting all of the benefits of putting good hardware in your business. To learn more about why should I lease equipment, click here.