Your business is growing, and you’re ready to invest in new equipment. Your options are to rent, finance, or lease. Which choice is best in the short term and long term? What do you need to know before leasing equipment?
Pros of Renting
You can use the equipment without the obligation of keeping it. That’s especially beneficial if you only need it for one job or limited use. It’s also an opportunity to “try before you buy.”
Cons of Renting
The equipment does not increase your equity in your business. Rental companies may not always have what you want when you need it. You may have to pay a high hourly rate.
Pros of Financing
You own the equipment, so it increases your equity. It doesn’t affect your cash flow once you pay off the loan. You can customize the equipment to meet your needs.
Cons of Financing
You may have to make a substantial down payment. The loan payments include interest which increases your cost. You’re responsible for maintenance and repairs.
Pros of Leasing Equipment
Your monthly payments are often lower than loan payments. Leasing provides certain tax benefits comparable to financing. The equipment is usually new. You aren’t committed to buying it when the lease expires.
Cons of Leasing Equipment
You always have a monthly payment. You can’t modify or customize the equipment. The leasing company is responsible for repairs and maintenance, and their schedule may not fit your work requirements. You do not own leased equipment, and it does not increase your equity.
Reliable equipment is essential for operating your business. Evaluating your company’s projected growth and finances will help you decide whether renting, financing or leasing equipment is best. Consulting with your tax advisor and seeking advice from your equipment dealer also provides you with accurate information for your decision.
Rexford Commercial Capital offers equipment leasing and financing programs for all kinds of businesses. Contact our financial specialists today to select the option that best meets your needs. We always put the interests of your company first.
