When your business needs new equipment, you have a few different options. You can lease it, get a loan or buy it outright. While there are certain situations in which owning your equipment may be the better choice, there are several benefits to equipment leasing.
1. Lower Upfront Payment
Buying equipment outright can put a dent in your company’s savings and, even with a loan, you may need to make a downpayment. With leasing, this is not usually the case. Most often, you are only required to make your monthly payments which can reduce the financial burden on your business.
2. No Added Debt
A lease is a rental agreement and, because you are not taking out a loan, there is nothing to pay back. This means that there are no interest fees to worry about, and it won’t affect your credit-to-debt ratio.
3. Easier Upgrades and Replacements
Depending on the kind of equipment your business uses, you may find that it quickly becomes outdated. If this is the case, then equipment leasing is likely a much better option for you than purchasing. With a lease, you are only required to keep the equipment for the length of the agreement; after this, you can switch it out for something more recent.
4. Included Repair Costs
Even if the equipment is not something that will become obsolete quickly, that does not mean it will last forever. As it ages, your equipment will likely start having issues and require repairs more often. If you own it, then this work will come out of your own money. With a lease, repairs are often included. This makes it easier for you to get the necessary work done and reduces the need for emergency spending.
5. Lower Tax Payments
You probably already know that you can claim business expenses on your taxes. This includes your lease payments. Because these payments are the same every month, it makes it easier for you to prepare. In comparison, the amount that you can claim for equipment you own will lessen as the value goes down over time.
Equipment is an essential asset for any business. From furniture to computers to large machinery, these items are necessary for you to run your company on a day-to-day basis. Equipment leasing can simplify the process of getting what you need and is often a more convenient option compared to applying for a loan. If you don’t want to increase your debt or the technology you use is continually improving, then a lease may be the way to go. Contact Abundant Wealth Financial today to explore our equipment financing options.