ome small business owners can be sceptical about this form of equipment procurement, however, due to the reduced ownership of the items.
This in-depth guide explains the must-know facts about the equipment leasing process, helping you discover the benefits and drawbacks of leasing, and find out if it’s right for your business.
Equipment leasing allows companies to lease or rent equipment without the significant cost of buying new. Much like renting premises, lease holders pay a monthly fee for a set period. When the lease is up, you may have the option to purchase the equipment outright, extend your lease or go for an upgrade.
It’s important to note that your lease agreement is likely to be with a third-party service and not provided directly by the equipment supplier.
Almost everything you need for your business can be leased. Products vary per company, but most leasing companies will offer leasing arrangements on various pieces of equipment, ranging from coffee machines and IT equipment to rolling roads and industrial washing machines.
Leasing can be a safer option of acquiring high-risk equipment that is likely to need regular repairs. Depending on your agreement, your leasing company may also pay for general maintenance.
Equipment leasing is not for everyone but it can be beneficial for small businesses looking to get started or for larger companies to keep up with new technologies without a significant cash outlay.
They might seem similar, but there are a few important distinctions to be made.
Equipment Leasing: You pay a set monthly fee to rent equipment for the duration of your contract. When your contract ends, you do not automatically gain ownership of the leased equipment although you may be offered the option to purchase it, renew your lease or upgrade.
Hire Purchase: You pay an initial deposit followed by set monthly instalments. Once your balance is paid in full, you will own the equipment outright.
Before you go ahead with an equipment lease, consider the following:
Check out different finance companies, what leasing options they offer and which kinds of equipment they cover.
Leasing options offered by equipment suppliers could actually be the best deal. Because companies want to maximise the sales of their equipment, the rate offered by their leasing partner could be more competitive than you think.
If you’re a small or medium business owner, equipment leasing could be the cash-flow-friendly solution you need to keep your tech up to date and your company relevant. Just be sure to check that it will be cost effective for your business and shop around for the best deal.
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