When you own a business, making sure that it is successful is a priority. Making sure that you have the right tools and equipment for your business to operate efficiently is key so that you can provide a good service to your customers. A lot of businesses opt to lease their equipment as monthly payments help to free up cash flow and can be more affordable. Leasing is great if you don’t have a large sum of cash to hand. If you’re looking to make cash flow easier either within your business or personally, a bad credit loan or short-term loan could help if you find yourself with emergency expenses. We’ll go into more detail on leasing for businesses below.
What is leasing?
When we talk about leasing, it can refer to businesses or personal assets, such as your car. Businesses, for example, use leasing for equipment that will benefit the way they operate but would otherwise be too expensive to purchase outright. Leasing allows the borrower to pay more affordable payments, usually monthly, for use of the equipment that they need. This is often a cheaper way of upgrading machinery and tools because you pay smaller amounts back to the lender. Leasing equipment is a great way to improve your business and allow you access to tools that could help make your business more successful, even if you don’t have the necessary funds to buy them.
Leasing is one of the options for funding new and updated business equipment when you need it. There are many positives that come with your business choosing to lease rather than buy. Here are a few of the benefits:
- Equipment and machinery can age. By choosing to lease, you can update your equipment every few years, and are always able to keep up to date with the improving technology. This would not be an option if you were to buy.
- Leasing allows you to spread the cost. You can weigh up your options and choose which monthly repayment term is right to fit the budget you have in mind.
- With leasing, you often get service agreements or add-ons. This means peace of mind for businesses and is a way of making sure you have access to someone that can help if your equipment is not running as it should be.
Even though leasing is a good way to allow businesses access to the equipment that they need, it is worth weighing up some of the negatives alongside the positives. Here are a few negatives you should consider when leasing:
- You do not own the equipment or machinery at the end of the lease term and therefore have no physical asset to show for the money you’ve spent unless your lender gives you the option to purchase.
- Some lenders give a set term length or enforce necessary service packages when you lease, bumping up the overall price.
- Leasing requires paying interest over the term and can sometimes mean it is more expensive than purchasing outright.
Overall, businesses can use leasing to their advantage, so that they can afford the equipment they wouldn’t otherwise be able to. If you need access to specialist tools or equipment at a more affordable price, leasing could be the perfect option for your business.