While many businesses choose to purchase equipment outright, leasing may be a better choice for some companies because it frees up substantial capital that can be invested in other ways. When you are leasing forklifts and other equipment, additional funds may be available to expand your business or make building improvements.
It is also a good idea to lease equipment if your company is growing, or if your industry is experiencing rapid changes. The ability to upgrade to the latest technology in equipment with flexible leasing terms can help your company stay a step ahead. In this post, we’ll cover some key reasons for leasing equipment and why it might be the best financing solution for your business.
What Are the Advantages of Leasing Equipment?
Leasing equipment offers you more flexibility and several advantages versus buying. As your company grows and adapts to a changing environment, leasing makes it easier for you to add equipment to your fleet or upgrade certain models on a regular cycle when technology and safety advancements are available. Also, many equipment lease agreements can include maintenance within the contract, allowing you to more easily budget for repairs and minimize downtime. Simplifying your payments by reducing the number of invoices that need to be paid can help your business save time and money.
Lower Initial Costs
When leasing equipment, you can minimize your upfront equipment acquisition costs by avoiding the large down payment of cash typically required when purchasing equipment. This cost structure for equipment leases lets you save your company capital for overhead expenses, emergencies and other investments that contribute to business growth.
No Obsolete Equipment Lying Around
Leasing means that you’ll never have to deal with outdated equipment. Once your lease expires, you can upgrade to equipment that includes the latest technology and advanced safety features, and the older equipment gets picked up. When you have top-performing equipment, your team can work safely, productively, and efficiently to best support your customers.
No Separate Maintenance Costs
Many forklift leases include planned maintenance and repairs within the agreement so that you don’t have to worry about unplanned downtime or maintenance expenses. When you work with a company that has factory-trained and certified technicians standing by, you can trust they will have the skills and expertise to keep your leased machines operating in peak condition.
Equipment leasing and financing lets you take advantage of government tax deductions listed in the United States tax code under Section 179. You may even be able to deduct up to 100% of the equipment lease up to a stated limit, directly from your company’s taxable income. Just keep in mind that the IRS will not permit a tax deduction for product depreciation. Consult your tax professional to determine the best approach for your business.
Leasing vs. Buying Equipment
Leasing instead of purchasing equipment means that you’ll be able to improve the health of your company’s balance sheet. When your company has less debt, you’ll have more financing options and the extra capital to invest back into your business.
Why Do Businesses Lease Equipment?
Equipment leasing keeps your credit lines available for running your business and applying for short-term loans. Leasing also helps you avoid the time-consuming task of applying for a large loan to purchase equipment on your own. When leasing equipment, the application process takes just minutes to complete and is facilitated by a team of experts in equipment leasing and financing. In fact, you may receive approval within minutes or a few hours and gain access to the financing you need within a few days.
Frequently Asked Questions About Leasing Equipment
What are the factors to consider when it comes to leasing vs. financing equipment?
Before leasing or buying equipment, consider whether your company is growing or your industry experiences frequent technology changes. If it does, leasing is generally more cost-effective. Also consider how comfortable you are maintaining the equipment, how much unplanned downtime or expenses will negatively impact your business, and whether you have the staff with the know-how to perform repairs.
Is it better for you to buy or to lease?
As you begin your lease vs. buy equipment analysis, take the time to determine the estimated net cost of the equipment you need to run your business. Look into available tax breaks, as well as the resale value that you could receive if you were to purchase the units. You should also factor in other elements such as the longevity of the warehouse equipment and whether your need for the product will conclude before your lease ends, if you choose the equipment leasing option.
How long will you need the equipment?
To settle the lease vs. purchase equipment debate, assess how long you’ll need the equipment. Will you need it for longer than 5 to 10 years, or is it something that you may only need for a few months? Your answers will help you decide whether to lease or rent equipment. Machinery experiences wear and tear, and will break down sooner with continuous utilization. If your team uses equipment in a demanding 24/7 or multi-shift operation, leasing can help supply your business with modern material handling equipment that can handle high usage applications.
How durable is the equipment?
Review the durability of the kind of material handling equipment that you plan to purchase. Is it something that you’ll need to replace in a few years, or do you have lower hours of usage which would allow your forklifts to last for many years with minimal risk? Machinery with a lengthy life span may retain a high resale value, making it beneficial to purchase. However, if you need equipment that may need to be replaced every few years, then equipment leasing is probably the better choice.
Find Your Equipment Leasing Solutions
Equipment leasing solutions will give your company the advanced machinery your team needs to run efficient operations. Leasing material handling and other warehouse equipment offers benefits like giving you more available cash for additional investments, possible tax breaks, and access to the latest equipment technology. For more information about equipment leasing and whether it is the best choice for your business, talk to one of our expert leasing consultants today at 888.EQDEPOT.