5 Reasons to Get New Equipment With a Lease
When you need to finance equipment for your business, there are two important options available to you. You can rent what you need through equipment leasing or you can take out a loan to purchase it. In many cases, leasing can be more beneficial to your company for several reasons.
1. There Are Fewer Requirements
As a small business, it might be difficult for you to qualify for a loan with good terms. If you are lacking credit history or have a low credit score, then you might end up paying high-interest rates. Lenders may also be hesitant to provide a loan if you haven’t been in business for long. A lease is generally easier to get in this case.
2. You Won’t Add To Your Debt
If your business has already taken out loans, buying equipment can further increase your debt. If you have a high debt-to-credit ratio, this can lower your credit score. With leasing, you are making payments to rent the equipment, so it won’t add to the debt you already have.
3. There’s Usually No Upfront Payment
Depending on your qualifications and the cost of the equipment, you might be required to make a down payment when taking out a loan. If you don’t have much to spare in your savings, this can cause financial difficulties for your business. Equipment leasing does not usually require a down payment.
4. Repair Costs Are Included
Maintaining equipment can be pricey, especially if you have to pay this cost on top of monthly loan payments. As your equipment ages, this can become even more of a problem. However, many lease agreements include the cost of maintenance and repairs. This can help to prevent unexpected costs associated with your equipment.
5. Upgrading or Changing Equipment is Easier
With technology quickly advancing, many types of equipment can become outdated in just a few years. If you own it, getting an upgrade can be more difficult. You will need to figure out how to get rid of the old equipment before buying something new, and you will likely suffer some financial loss. With a lease, you can get an upgrade after the leasing period ends or, in some cases, even sooner.
While there are some situations where buying equipment may make more sense, equipment leasing is a great option for small businesses in many cases. It can make it easier to get the equipment you need without the stress of another loan. It also offers a variety of other benefits that may make it a more appealing choice.