What You Need To Know About Equipment Financing
Every business needs some kind of equipment to operate efficiently, even if it’s just a computer. Many modern companies need all sorts of electronics as a bare minimum. If you create your products or offer specialized services, chances are some new equipment could make your job easier and faster to complete. Unfortunately, new equipment can be costly, and many companies don’t have the finances to buy equipment outright. In this case, equipment financing maybe your best option.
Lease or Loan?
Your two big options for financing your equipment are leases and loans. In other words, you can rent your equipment over a set period and return or upgrade when the term is up, or you can apply for a loan to purchase the equipment. Each option has a set of benefits that may fit better for your company.
The lower initial price tag of leasing may mean you can rent more pieces of equipment at once, paving the way for more growth in your business. This also means you can switch out older models for newer, more efficient ones easily. If you aren’t familiar with how the equipment operates, many rental companies will teach you how, and they may even offer regular maintenance as part of the contract.
Keep in mind though, that the contract may have restrictions as to how you can use the equipment, and it’s a good idea to ask how long it will take the company to send someone out if you run into issues. Delays due to broken machinery can interrupt your entire business. You may also pay more in the long term, even with lower monthly payments.
A loan may be more difficult to get initially, but it can save you money over a while. If your business doesn’t need the latest and greatest version of your equipment, it may make more sense to buy it outright and continue using it until you can’t anymore.
Unfortunately, not everyone will qualify for a loan, which may make leasing your only option. Buying equipment can also mean that you’re stuck with a piece of machinery that will only depreciate, and you’ll be the one tasked with all the repairs.
Both options can be convenient for companies looking to get more equipment, but only you can decide what’s right for your company. With a little research, you’re bound to find the right equipment financing option for you.