When thinking about acquiring new equipment most companies think they only have two choices, either purchase it with cash or get a loan from a bank or other financial institution. In reality there is a third option of leasing the equipment. Leasing equipment can help you get the equipment you need with terms that work for you, whether for upgrades, tax benefits, limited budgets, cash flow and more.
Below are 7 common myths about equipment leasing.
- When my lease is up I have to return the equipment.
When you lease equipment there are several options that you have at the end of the lease depending on your needs and the type of lease. Your options at the end of the lease can include extending the lease, upgrading your equipment or purchasing it from the leasing company.
- Leasing is not a cost effective way to acquire equipment.
When considering the cost of acquiring equipment and looking at it beyond face value there are many financial benefits to leasing. The financial benefits include a lower initial out-of pocket expense since equipment leasing allows you use of capital generating equipment, without the huge cash outlay associated with a cash purchase. Additionally, leasing can cover costs such as warranties, maintenance, supplies and installation. Also, there can be tax benefits to leasing that can save you money.
- There are no tax benefits to leasing.
Depending on the type of lease you choose the payments can be treated as a company expense and can be tax deductible.
- I have already acquired the equipment so leasing is not an option.
Fortunately if you find the right leasing company they can find a way to work with you even if you have already acquired the equipment. For example, one option you may have is a sale-leaseback. With a sale-leaseback a leasing company would purchase the piece of equipment from you and then lease it back to you. A sale-leaseback can be beneficial because it can free up capital for your business and even lower your monthly payments.
- My payment has to be the same every month.
Some leasing companies have the ability to offer you creative leasing solutions that can work with the ups and downs of your cash flow trends. For example, if your business has seasonal cash flow changes a leasing company can modify your payments to match.
- Leasing is only an option for companies who can’t afford to purchase their equipment.
Since there are so many benefits to leasing, it can be a good option for companies regardless of their cash flow situation.
- Leasing the type of equipment I need is not possible.
Leasing can work for all types of equipment from big to small and for every industry from medical and office equipment to agricultural and environmental equipment and more.