Equipment Leasing Tips for New Business Owners
When you as a business owner are faced with the issue of acquiring new equipment that your company needs for operations, the first question that needs to be asked is whether you should buy it outright or lease it from the owner. If you’re thinking of buying, you’ll need to have more upfront cash available to put down on the equipment, even if the purchase price is being financed by a bank. In this scenario, you will own the equipment, but that could be a drawback if it becomes obsolete near the end of your payments.
There are a number of advantages to leasing that make it very appealing, starting with the fact that you won’t have to put down as much money initially. You won’t own the equipment, but that can be beneficial in some ways, because you don’t have to maintain it, and if it becomes obsolete, you should have the option of leasing a more modern version. Here are some other leasing considerations to be aware of.
Lease From Someone in Your Industry
It’s always a good idea to lease from a provider who is familiar with equipment used in your industry. For instance, a provider in the forestry business will be much more familiar with all the heavy equipment used for logging and transporting than would some other outside provider. This increases your chances for approval, and for better understanding throughout the life of the lease.
Know the Lease Types
Make sure you understand the difference between a fair market value lease and one which has a purchase option. The purchase option lease will have much higher monthly payments, but you’ll be able to buy the equipment inexpensively at the end of the lease. The fair market value lease will have lower monthly payments, but will include other options at the end of the lease.
Combine Your Leases
It can be very advantageous for your business to combine several or all of your equipment purchases under the same comprehensive lease arrangement. When these are combined, the total monthly payment is generally much lower than it would be if you secured separate leases for each one of them.