Pros And Cons Of Equipment Leasing

We are going to present you here with some of the positive and negative elements that you should consider when you are leasing equipment.

The first is property. The biggest disadvantage is that at the end of the contract, you are not the owner of the equipment. Obviously, this may very well be an advantage, especially in the case of computer equipment where the technology changes fast.

Leasing equipment is generally more costly than buying it. This is a great disadvantage but only when you do not need a loan in order to buy the equipment. When you are leasing equipment for 3 years is $5000 and you make monthly payments for $40 times, you will end up paying $7200 total at the end of the 3 years.

Looking for financing makes equipment leasing easier than getting bank loans. Generally leasing equipment is more liberal. Any financial institution would ask you for your commercial records of the last two to three years. Leasing companies on the contrary, would only want to look at your credit history for the last six months. The second option is of course more advantageous for a business.

Another advantage of equipment leasing and probably the main reason why people opt for it is the increase in working capital. Naturally, leasing equipment will cost you less money on the first month than buying it. After making a substantial purchase, you reduce the amount of money you have to go about your daily activities.

Equipment leasing also allows you to reduce the value in the books in concept of equipment, meaning that your payments for the leasing of the equipment can be registered as commercial expenses and therefore pay more in taxes

Equipment leasing works best with high-tech equipment. Technology changes rapidly and what you buy now man be obsolete in a matter of two or three years. Worse than that is the fact that the fast pace of technology will not allow you to resell the equipment for the same price and you will always lose money. Buying new equipment would only be profitable to you if you recycle equipment within you company.

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