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Business Equipment Leasing Benefits

Equipment leasing is one of the most reliable ways to purchase business equipment today. Recent surveys in the United States found that about 80% of new businesses source some of their equipment through leasing. New businesses always face the problem of finances because their revenue stream is still low. Leasing is a better alternative to purchasing equipment because it allows your business to use available capital for cash flow.

However, there are several questions you need to answer before making a particular leasing decision. Some of them are:

1. Do you think you will need the equipment for a long time? If the answer to this is YES, it is recommended that you negotiate a purchase alternative that ensures that part of the lease payments go to the acquisition account.

2. What are the terms and conditions or legal repercussions associated with the lease? It’s a better idea to skim the lease before putting your signature to avoid adverse repercussions.

Advantages of renting commercial equipment over buying!

Low monthly payments

Monthly lease payments are typically lower than the expense of purchasing the equipment through other means. Borrowing to purchase equipment is much more expensive than leasing due to the high interest rates charged by most financial institutions.

Your capital is not tied!

Leasing helps you keep your business money for other needs. Unexpected expenses are not unusual in the business world, and this money can also come in handy as working capital when your income is low.

Immediate use of the equipment!

Most financial loan sources require up to a 25% down payment. Leasing, on the other hand, provides you with the equipment at a nominal upfront cost. Most leases will only require at least one or two payments up front to allow use of the equipment.

No obsolescence!

Technological advancement is happening at a dangerously fast rate and a computer you’re using today could be just as out of date two years from now. Leasing gives you the opportunity to enjoy the best of today’s technology while it lasts and upgrade when it becomes outdated. Therefore, you can stay competitive and flexible.

Fixed payment terms!

Banks and other financial institutions have variable credit rates depending on market dynamics. Lease payments are usually fixed regardless of what happens in the market. It’s a better alternative because it protects you from potential skyrocketing interest rates. For example, there was an increase in rates from around 9 percent to more than 20 percent in the same year in the 1980s. Such a financial inconvenience cannot occur with equipment leasing.

Tax advantage!

Leasing has a tax advantage over other financing options. Unlike loan payments, equipment lease payments can be a pre-tax business expense that can significantly reduce your taxes. Taxes are generally paid on profits and can add up to 40% to the cost of equipment when paid in cash.

Simply put, equipment leasing is the way to go to save the time and hassle of finding a guarantor for money to purchase business equipment. It guarantees a quick take-off for your company.


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