When deciding between equipment leasing and financing, many business owners jump straight to wanting a loan. After all, shouldn’t they want to own their equipment? However, this is not always the best option. There are a lot of benefits to leasing equipment. The following are four reasons why you may want to lease your future equipment.
1. It Is Less Expensive Upfront
One of the big concerns for businesses is the upfront cost of equipment. It can cause a major issue for cash flow. Leasing is one of the best ways to spread out the cost to avoid such a significant hit. There are minimal upfront expenditures. Some leases require no money upfront. You can instead spread out the cost over a series of easy payments.
2. You Can Be More Flexible
Typically, leases can be negotiated with fairly flexible terms. If you are leasing a lot of equipment, you may be able to negotiate better rates. Alternatively, if you want to reduce your monthly costs, you can likely extend the term of the lease. You may even be able to negotiate an arrangement that lets you lease equipment with less-than-ideal credit.
3. It Is Easier To Upgrade
For many businesses, equipment will only be used for a few years. If you are in a fast-paced industry that has significant technological improvements at regular intervals, you likely don’t want to have a bunch of equipment that has been turned obsolete by the latest evolution. Leasing means that you aren’t going to be stuck with that equipment and can easily upgrade. In some cases, leases may even allow upgrades during the term.
4. There Are Big Tax Benefits
Although leases are more expensive than buying equipment outright and may be more expensive than getting a loan, they have some tax benefits that can offset this. Specifically, the lease payment can typically be considered an expense because you are paying money but not getting an asset. Thus, they can be used as a tax deduction. Conversely, buying equipment outright cannot be deducted (although the depreciation can be). For a loan, only the interest and fees are deductible. This can help make the math for a lease more enticing.
Learn More Today
Contact WHW Capital to learn more about our leasing packages. Whether you need technical equipment, large industrial machinery, or anything in between, our team will structure a package tailored to your business requirements.