Purchasing and maintaining equipment can get expensive. It seems like as soon as you buy something, a new one comes out, so yours is obsolete. Due to the high costs associated with owning equipment, many business owners opt to lease instead.

There are some benefits associated with leasing including monthly payments spread out over a specified period of time instead of a lump sum due at one time. Plus, many leases offer add-ons that provide you with peace of mind and remove the need for in-house techs.

If you need new equipment or tech, but can’t afford it, you may want to consider leasing equipment. In this blog, we’ll explore why you should consider leasing equipment.

What is it?

Equipment leasing is a form of financing where you rent the equipment instead of purchasing it outright. Instead of purchasing expensive equipment, you are basically borrowing it for a specified period of time. Then, when the contract expires, you can purchase it, renew the lease, or buy the equipment.

This is different from equipment financing in that the equipment does not belong to you when the lease is over. It is important to know that in the long run, leasing equipment is more expensive, but if cash flow is tight, it might be your best option.

How does it work?

If you decide to lease instead of buy, you enter into an agreement with a vendor or the equipment owner. This agreement is a lot like a standard rental agreement: the length of the lease will be specified as well as how much you pay every month.

You will use the equipment until the deal expires. There are some instances in which you will be allowed to break the lease, which will be clear in the contract. Once the lease ends, depending on the vendor, you may be able to purchase the equipment for the current market rate or lower.

Rates vary from one leasing company to another. Your business credit score may also play a role. Your application can be approved online within a few minutes. Terms are typically 3 to 10 years, depending on the type of equipment. It is not a loan, so it will not show up on your credit report. The IRS typically allows you to deduct equipment lease payments if the equipment is being used for your company.

Benefits of Leasing Equipment

There are several benefits associated with leasing equipment:

Cost-effective
Equipment can be updated
Easier to scale
May offer tax credits

Questions to Ask Before Leasing Equipment

Before you sign an equipment lease agreement, consider the following questions:

What is your budget?
How long will you need the equipment?
How quickly will the equipment become outdated?

Conclusion

If you need equipment or tech for your small business, but don’t have the cash on hand to invest, you may want to consider leasing equipment. As you can see, it can be beneficial for your business. If you’re ready to get started, contact First Class Lending to get the process started.