When Is The Best Time To Lease Business Equipment?
Today, when you are setting up a new office, you can lease everything that you need to make your office fully functional. Whether you need computers, office furniture, or even heavy machinery for your office, everything is available under the sun. Of course, when you decide to lease equipment, the type of business you are in will determine the items that you need. The cost of the equipment is also an important determining factor.
What do you need?
If you have a small “one-man” business where you only need one computer, buying it will make more sense than leasing. On the other hand, a business that has several employees will find it more economical to lease the computers. Think about your goals and the type of business you are operating when looking into leasing. Each lease decision is unique and it is important to understand the options.
According to experts, almost 80% of companies in the country choose to lease their equipment. The Equipment Leasing and Finance Association (ELFA) says that there are thousands of companies that lease equipment. This is proof of the demand out there and the fact that the benefits of leasing are quite evident. Carrying out a cost-benefit analysis will help you to determine whether you should lease.
Hedging against obsolescence
Leasing offers a great hedge against equipment obsolescence. If you are leasing equipment like computers, you have the opportunity to update them constantly. It is common knowledge that new technology offers benefits such as improved or faster ways to perform functions. This means that any business that wants to remain ahead of the competition has to think about regular equipment upgrades.
Lower monthly payments
Leasing has the advantage of allowing you to make lower monthly payments than when paying a bank loan. You can get fixed financing rates that are more convenient than floating rates and they make it easier to budget. You can also enjoy tax advantages while protecting your working capital by avoiding costly down payments. When you lease, you also gain access to the latest business tools.
Factors to consider when leasing
When coming up with an equipment leasing package, you may need to consider some issues. Think about the equipment that you need and how long you need it for, you also need to consider whether you want additional services, training, and supplies as part of the equipment lease contract. Think about your company’s future needs to make sure that you get the right equipment and find out about the total payment cost and what it includes.
The leasing option begs certain questions. Find out the person you will be dealing with, the firm financing the lease, and how long the firm has been in the leasing business. As a rule, you should only deal with a financing source that has been in the business for quite a while. Make sure that you understand the terms and conditions of the lease. Ask about casualty insurance, personal property tax, and the options available for trading in and upgrading the equipment before lease expiry.
