Equipment Leasing vs. Buying
Leasing is taking equipment for a specific period of time by making monthly payments to a lessor. The lessor owns the equipment and as a customer you are only using the equipment for the leased period of time.
The advantages of leasing include:
Keeping up with the latest technology. The market is a flush with new upcoming products and equipments. As the new products roll into the market, it does not take too long for your own equipments to get outdated. Using leased equipments enables you to keep abreast of modern technology. Up to date equipment helps your business perform better and is the most preferred reason as to why people opt for leasing.
Better Financial management:
With leasing, you don’t need to put down a huge payment for your equipment. This enables you to use your financial resources in the best interests of the company. Since leased goods have a monthly payment, you can adjust your balance sheets accordingly and plan your expenses better. Leasing frees up the cash flow and with more money at your disposal, you are better equipped to outsmart the competition. Leasing also offers you tax benefits which helps you to write off your leasing payments as business expenses.
Availability of Funds for leasing:
Many banks are more than happy to give you the requisite funds for your lease payments. The leasing companies are mostly concerned only with your credit history pertaining to the past six months. On the other hand, loans for buying require a lot of checks on your credit history and more time is involved in getting the final approval for the loan amount.
The benefits of buying are as follows:
Ownership of your goods. When you buy your own equipment you have complete ownership of the goods. This means that you are not answerable to anyone about the maintenance. Also you can completely avoid the paperwork associated with leases which can be quite messy. When you buy something outright, you can completely avoid agreements with their hidden clauses. You have to be very careful about the fine print in your lease and such hidden details can become a botheration, if things go awry in the deal.
Appreciation in prices of your goods:
When you are the owner of equipment, you have the choice to make a tidy profit on its price when it garners a sufficient amount of appreciation.