All different kinds of businesses lease equipment, depending on what type of equipment they need. An equipment financing company can provide everything from agricultural and aircraft equipment to medical and fitness equipment for your business, or even for your personal use. For example, some people prefer to lease computers because of the high rate of going obsolete, instead of buying a computer and trying to sell it when it’s out of date. Even if you have recently bought equipment (within the past 90 days), you can opt to lease it instead, an alternative called sales-leaseback.
In addition to leasing equipment, you can also choose to include other services in your lease, such as installation, maintenance and training that your equipment financing company offers. Depending on how often you foresee your company needing to use the equipment in the future, you can also decide to return the equipment at the end of the term, buy the equipment when you have paid it off in lease payments or even upgrade the equipment at the end of the term. By working these options into your lease at the beginning, you can have your equipment situation planned out for several years, without having to worry about making any large payments.
The main reason that most businesses lease equipment involves the financial flexibility of leasing, compared to buying the equipment. Businesses don’t lease to save money in the long run; in the end, leasing probably costs more. However, leasing allows your company to hang on to a lot of its finances and use that money to invest in other areas of business, or just to keep up with the daily expenses of running the business. Many businesses find it worthwhile to pay a little extra in the long run if it means keeping more money right now. If you have a booming business that can afford to buy its equipment, then it might be to your advantage to buy rather than lease. For most businesses, though – especially those just starting out – having money for the present is a vital necessity for ensuring the business’ future.
When leasing equipment from an equipment financing company, you usually have to put some sort of deposit down. However, you also have the option of incorporating this deposit into your lease, and paying slightly larger monthly payments. When compared to a traditional bank loan, which often requires a large amount of money upfront, an equipment lease can provide a much more doable contract. Lease rates depend on how much equipment you lease, the length of time you lease it for, whether you utilize additional services and also how large of a risk the equipment financing company believes you present. Businesses that have only existed for a short time – for example, two years or less – may pay higher monthly payments because of the increased risk.
You have many payment options when leasing equipment, and many businesses like to customize their payment plans according to their individual business needs. For example, you can choose to make the monthly payments at the beginning lower than average, and make up for them in later months, when you predict your business will be pulling in more profit. You can even opt to completely defer payment during the first few months. Also, your business can customize its payments according to a seasonal pattern, so that it pays higher rates during busy months and lower rates during off-months.
By Lisa Zyga