Is It Better to Buy or Lease Equipment For Your Business?
For a lot of individuals who are starting or expanding businesses, there are many decisions that have to be made and a lot of money that needs to be spent. A big part of these expenses is the cost of getting new equipment. A big question for fledgling business owners is whether to buy equipment or go for equipment leasing. There are pros and cons for both options, and the answer is different for each company. Here are some of the respective benefits.
Buying equipment is a long term investment. It is good for people who know they are going to be using the machines for a very long time. The good side of ownership is the freedom of owning the equipment and can use it for whatever you want, without any restrictions, and without payment after the original cost. If a piece of equipment is going to stay current and be usable for a long time, this is a good choice. There are also some tax write-offs for new equipment. The big downside is that buying the equipment could be prohibitively expensive. Leasing tends to be much cheaper, and the risks and costs of buying equipment are generally much higher.
The decision to lease equipment is great for when you need those machines right now and don’t want to spend a lot of money on it. Leases are a lot easier to get, even aside from the dollar amount that you’ll have to invest initially. Equipment leasing is also appropriate for temporary or seasonal needs. Equipment leasing is also a good fit from businesses with equipment that needs to be upgraded pretty constantly. If you operate in a field of work where you continuously need new machines, leasing is a good idea. The downside is that if you wind up using the equipment for a long time, it could end up being more expensive than buying it would have been. You are also obligated to pay the entire lease, even if you used the equipment less than you thought you would.
It Depends On Your Use
In short, equipment leasing is much better for a company that only has a temporary need for the equipment or if the company isn’t sure they will continue to use the equipment in the future. Leasing is also the better choice if the equipment needs to be upgraded often. Buying is better for businesses that will use the same tool for a very long time and won’t need to replace it.