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Equipment - Buy or Lease?

Determining whether to lease or buy equipment for your business can be a difficult decision. While there are certainly pros and cons to both, leasing can be more beneficial than buying. Especially when it comes to maintenance costs and tax write-offs, there are several hidden benefits to leasing equipment and machinery that shouldn’t be overlooked.

10 Reasons to Lease vs. Buying Equipment and Machinery

  1. Increase Buying Power Leverage your buying power and free up cash with periodic payments rather than one upfront purchase. You can also add extra features or accessories to your equipment for a small payment increase.

  2. Equipment Leases are Tax Deductible Luckily for business owners, equipment rentals are generally 100% tax deductible as legitimate business expenses.

  3. Easier to Upgrade Equipment Unexpected outcomes during your operations may completely change the equipment you need. If you realize you don’t have the right equipment or machinery for the job, upgrading is easier than ever if you lease. This is because you aren’t stuck with an asset you must make continual payments on—if you need to upgrade, it’s simpler than ever.

  4. Lease Terms Are More Flexible Along with being easier to upgrade, equipment leases are much more flexible than an equipment purchase. If you need to upgrade or switch machinery, Equipment Leases have very flexible terms that work for your business. Buying simply does not provide you with this flexibility, as you are locked into a long-term purchase, often with a loan.

  5. 100% Financing Available A major advantage of leasing is that you can roll all of the sift costs into the lease including delivery, training, insurance, software upgrades etc. This kind of financing flexibility is rarely available in bank financing or traditional lending institutions.

  6. Eliminates the Need to Trash Outdated Machinery Equipment depreciates and becomes obsolete fast. When you buy, you risk being stuck with a piece of machinery that doesn’t keep up with industry standards. Instead of throwing out or trying to salvage old machinery every few years, leasing ensures you consistently have the best equipment the industry has to offer.

  7. Easier to Get Equipment with Challenged Credit Especially if you are a new business, you may not have the best credit. That’s perfectly fine! Leasing eliminates the need to have years of credit history since you aren’t taking out a loan to finance an equipment purchase.

  8. Control Your Cash Flow Small payments over the term of your lease means your equipment will start earning you money while you pay it off, making it easy to balance your expense to revenue ratio.

  9. You’ll Be Using the Equipment for Less Than 5 Years Since equipment and machinery become obsolete so quickly, it makes more sense to lease if you plan to use the equipment for less than 5 years. This ensures that your business doesn’t get stuck with outdated equipment and a hefty bank loan to finance a large purchase.

  10. Leasing Allows Your Business to Stay Competitive Last but not least, leasing ensures you keep your business ahead of the competition. From helping businesses with smaller cash flows grow, to using the newest machinery on the market, leasing is the simple choice if you want to stay ahead of the competition. If you don’t have the machinery that can get the job done, you can bet that your customers will choose a company that does.

Each entrepreneur has their own preferences, it comes down to what is going to work best for your short- and long-term goals.

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