You’re a tradeshow manager looking for equipment to help with an upcoming show or you’re looking for equipment to help with you current flourishing business, but, purchasing equipment sounds too costly. It’s until then a coworker suggests leasing equipment from numerous companies. Before you make any final decision, you decide to do extensive research on equipment leasing. What does it mean, is it expensive, and how it is more beneficial are all questions we will answer throughout the article so you don’t have to do endless hours of research.
Equipment Leasing 101
It can be a common mistake to assume leasing and borrowing are interchangeable terms under a business spectrum. One distinctive difference between these terms is the monetary compensation to the lender for leasing equipment. Generally, you pay a flat-fee rate with a fixed interest rate and fixed term. Many companies seek the leasing route compared to purchasing, especially if they only plan to use the equipment in the short-term. Purchasing tends to be more costly and may not be worth a large payment as the equipment will continue to depreciate.
What kind of equipment can be leased? You may be imagining large tractors or machineries as equipment to be leased but equipment can be a broad term and can cover from pcs to vehicles for all types of businesses.
- When leasing equipment, you won’t have to worry about a down payment or collateral unlike purchasing it. There is no requirement to contribute collateral so you will have the liberty to collect your cash and compensate easy payments.
- Worrying about an application process undergoing a long strenuous time-frame is all overwhelming, but luckily, leasing equipment is an easier application process. There is fairly less financial paperwork compared to taking out a small business loan.
- Leasing equipment offers a couple of flexible terms to choose from after the lease ends:
- You can purchase equipment at a fair market value and if you do, the lender will then relinquish the title to you.
- If your equipment has come to its last bit of usefulness, you can trade the current item to a brand new equipment piece.
- If none of the options above seem ideal to you, you can always choose to do the simple option, return the equipment.
After you’ve chosen to lease a piece of equipment, you begin your flat fee payments but you will also have to face an effective interest rate alongside it.
Another downside to leasing equipment is the cost of the actual equipment, especially when multiple factors are considered (credit score, annual revenue, age,etc.). There will also be a charge of equipment value and length of use for the equipment.
Need to Lease Equipment?
As we have gone over, equipment leasing provides various benefits for those who need equipment for a shorter period of time. Here at Strategic Business Loans, we offer numerous opportunities from small to big businesses to continue flourishing in their business without a financial predicament. Contact us today for equipment leasing and continue to grow your business.