The Difference Between Equipment Leasing and Financing
One of the biggest challenges a fledgling business faces is how to stock it with the tools and equipment it needs without breaking the bank. One of the areas where enterprises spend the most money is machinery and necessary office equipment. Have you ever looked into alternative ways to get what you need at a price you can afford? Equipment financing and leasing are just two of the options you should consider when faced with sticker shock.
When purchasing a car, you have a couple of options when it comes time to pay up. You either pay for the car in cash or use a down payment and then borrow the rest. When you sit down at the financing table at a dealership, you do so with the understanding that once the amount of the car loan is paid in full, you will get the title to the vehicle and own it.
The same principle applies to equipment financing. When you go to purchase a high-ticket item or several, the supplier may offer you a financing option. You may have to put money down or perhaps you will be able to get 100 percent of the money you need through whatever financing company the retailer works with. The time it takes you to pay off the loan is dependent on what you qualified for and your ability to pay it back.
Going back to the new car, perhaps you can’t afford to finance such a large purchase. You still need the car, so what can you do? Car dealerships offer leasing options. When you lease a car, you get it temporarily, usually for two years. You pay a lower monthly payment to rent a vehicle than you do to purchase one. At the end of the two years, you return the car or pay off the remaining balance and keep it.
Leasing equipment for your business works in this way. If you have no desire to own something for years and years, or if you can’t afford higher monthly payments, leasing may be the right thing for you and your company. Leasing also allows you to use the equipment for the contracted amount of time, and then return it. Once you do, you are free to sign another lease and get something even newer. It is a way to have the latest and greatest and is one popular option for medical facilities.
Whether equipment financing or leasing sounds like a good option, know that you will pay interest on both. Either way, you can get the supplies you need at a price you can afford.