Everything You Need to Know About Equipment Leasing
Every business needs the right equipment if it’s going to keep its doors open and continue offering the very best services to its customers. However, reliable equipment often costs a pretty penny, something that can be a big problem if a business is new or cash flow’s been tight. Equipment leasing is an ideal option for many businesses in that position. Here’s a closer look at how it works.
What Is Leasing and How Does It Work?
If you’ve ever rented an apartment or a car, then you probably have a pretty solid grasp on the basics. You aren’t required to put any money down toward your equipment of choice. You’ll instead agree to make set monthly payments toward that equipment for the span of time your leasing agreement covers. Once that time’s up, you’ll have three choices.
- You can make arrangements to renew the agreement and continue.
- You can terminate the agreement and explore other options.
- You can elect to purchase your equipment for a reasonable price and officially make it your own.
What Are the Benefits of Leasing?
As with leasing a place to live, equipment leasing can provide a simple, straightforward way to keep your needs met if you’re not yet in a position to buy your equipment outright. You don’t have to worry about coming up with the cash up front, so you can get right to work earning money and keeping your business growing. In most cases, it’s also usually much cheaper to make lease payments than it is to make payments toward a high-interest loan or another line of credit.
If you work in a field that sees expensive equipment quickly becoming obsolete, leasing may even be a viable permanent solution for your company. (Popular examples include tech-heavy industries that require constant access to cutting edge solutions.) Instead of constantly having to sell and rebuy equipment outright, you can simply stay current by upgrading once the terms of a given lease are up.
Ultimately, equipment leasing is going to be a better fit than traditional financing for business owners that need or prefer flexibility. It’s an especially good fit if the equipment you’re looking to obtain isn’t anything you’ll be using on an extremely long-term (if not indefinite) basis. Don’t forget to shop around a little before deciding where and with whom to sign your lease. Always look for the most competitive rates and the most reasonable terms!