The Basics of Equipment Leasing
Leasing your equipment can be a great way to start your business quickly or rapidly expand your line of products and services. However, there are many options to consider when shopping for equipment leasing. Learn some of the benefits of choosing to lease your equipment, as well as some of the options available to you today.
There are two basic types of leasing options to choose from for your equipment. Your situation can help you determine which one is right for you. First, a capital lease is similar to a mortgage. While you need financing for the equipment, you agree to take over all responsibilities and liabilities that come with owning equipment. Essentially, you already own the equipment, you simply have to make consistent payments to your lender.
This type of lease is ideal for rugged equipment that has a long lifespan. It’s also a good option if you’re looking to purchase the equipment at the end of the lease. It’s a lease that allows you to get started providing the services you need to start your business, and gives you the long-term benefits of equipment ownership.
The second type of equipment leasing is an operating lease. Unlike the capital lease, this lease doesn’t require you to take charge or repairs, maintenance or any other operating expense. You’ll simply use the equipment for the lease period and return it to your lender.
Operating leases are particularly popular for computer equipment or other devices and tools that quickly become outdated. You wouldn’t want to purchase outdated equipment at the end of your lease, so choose a lease that allows you to upgrade to the latest model at the end of the lease period.
Unlike a loan, however, an equipment lease typically doesn’t allow you to prepay your monthly payments. Instead of a loan amount that you’re paying overtime, a lease is an agreement to rent equipment for a set period of time. At the end of the lease, you can either renew the lease, purchase the equipment or lease an upgraded tool or piece of equipment under a similar contract.
Each option has pros and cons, depending on the type of equipment and your particular situation. There are also many different varieties of these two basic categories. Shop for equipment leasing that offers you the best rates, generous terms and allows you to grow your business effectively with the equipment you need.