6 Leading Pros and Cons of Leasing Equipment for Businesses

Leasing operational equipment can be a great way to get the tools you need, without paying a fortune in upfront costs. However, there are some downsides to leasing resources as opposed to buying. So it's important to weigh the pros and cons before making a decision. Well-planned leasing can help any business stay flexible and adaptable.

Leasing Can Conserve Capital:

Intuitive Business Coach Susan Guillory explains that “The primary difference between buying and leasing equipment is that with the former, you own the asset until you sell or dispose of it. With leasing, you have access to the equipment for the life of the lease, and then you give it back to the entity you leased it from—unless they offer you the option of purchasing the equipment at the end of the lease.” Here’s a quick summary of the advantages and disadvantages of leasing in business:

The PROs

1.       Cost-Effectiveness: In some situations, it can be more affordable to lease than buy. This is especially practical for small businesses or startups that may not have a large budget for equipment purchases.
2.       Logistical Flexibility: Leasing makes it easier to upgrade or downgrade equipment. If you need to transition to different equipment during the lease term, you can typically do so without incurring penalties.
3.       Boosted Operations: Leasing can also help businesses conserve working capital, as payments are typically made in installments. This frees up cash flow to be diverted towards other necessities.

The CONs

1.       Lack of Possession: Leasing means that companies do not own the equipment they use. This can cause conflicts of interest if the equipment becomes damaged or malfunctions.
2.       Costly Down Payments: Another potential drawback is that you may have to make a large down payment at the beginning of a lease. Large outflows of cash are an obstacle for businesses with limited finances.
3.       Long-Term Commitment: Leasing equipment usually entails binding agreements. And binding agreements require extended planning.

Conclusion:

So, should your business lease equipment? It depends. If you’re well-informed about the risks and responsibilities of leasing, it should be easy to determine. At the end of the day, responsible leasing can help a company stay agile. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, health and wellness, bettering your relationships, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.