Most companies in need of expensive equipment cannot afford the entire lump sum payment at once. This leaves the alternatives to leasing or financing. With leasing, you rent the equipment but never own it, while with financing, you make monthly payments until the equipment is yours. There are several reasons why equipment financing is more beneficial to businesses than leasing.
Own What You Use
When you purchase what your company needs with equipment financing, you make payments for a limited period of time, and then the equipment is yours. With leasing, though, you continue to make payments for the life of the lease, and despite the expenditure, you own nothing. If you still need the equipment, you must continually make payments.
You Can Resell What You Own
If you purchase equipment through financing, you can resell it if your company no longer needs it even if you are still making payments. However, when you lease equipment, you must continue to make payments for the life of the lease whether you need it or not. Otherwise, you may have to pay costly termination fees.
Financing Is a Straightforward Process
Buying the equipment your business requires through financing involves a straightforward contract that stipulates the total payment, duration of the agreement, down payment, monthly payments, and interest. When you lease, you must keep in mind adding provisions such as taxation and market value as well as fees for late payments, cancellation, maintenance, renewal, and return. Leasing laws have been changing lately, making the leasing of equipment an even more complicated endeavor. You may have to have an accountant handle the tax issues.
Modern contracts often stipulate that when you lease equipment, you are responsible for its maintenance. If you have difficulties with the equipment you lease, you must pay for costly repairs, and when you return the equipment you receive nothing in compensation.
For more advice on equipment leasing, get in touch with Sudden Rivers Capital Corp.