How Your Startup Business Can Benefit From Equipment Leasing

Getting a startup up and running is itself a humungous task. And if in the process you are starved off your funds, then managing your business can become a lot tougher. One way to save your capital is by leasing equipment rather than purchasing it. There are many companies who offer equipment leasing for startup business owners. And the benefits of leasing equipment is starting to dawn on many startups who are beginning to choose that option rather than buying their equipment outright.

Top 4 Benefits of Equipment Leasing

Equipment leasing offers some incredible benefits for startups –

  • Cheaper Than Outright Purchase: As discussed earlier, leasing out equipment is far cheaper than buying it outright. This holds very true if you are starting a business with limited capital. If you have a capital of $100,000 and you need to choose between purchasing equipment worth $40,000 or leasing it at $2500 per year, the smartest thing to do will be to lease it and invest your capital in other areas.
  • Save On Maintenance: Another great benefit is how much money you can save by avoiding maintenance costs of the equipment. If you purchase, it outright, you may get free maintenance for a few years, after which you will be required to shell out a sizeable amount on maintaining them. But when leasing the equipment, you can get a contract where you are not liable for any maintenance costs on them. Instead, the leasing company will cover the costs of maintenance.
  • Save Taxes: You can also save taxes when leasing. You will be able to deduct your lease expenses from your earnings before they are taxed.
  • Always Have The Latest Equipment: One of the greatest benefits of leasing is that you will always be in a position to use the latest equipment. When you purchase an equipment outright, you are bound to use till it becomes useless. Even if an improved version of the equipment hits the market and you want it, you may not be able to purchase it because of the costs involved. This disadvantage is almost non-existent when leasing. If a newer equipment is on the market, you can wait until your lease ends and then take a new lease on the newer equipment. As such, your business will always be using the latest equipment, and have an edge over others who are still stuck with their old ones.

What You Need To Keep In Mind When Leasing Equipment

Whether you are looking for vendors offering equipment leasing in San Diego or any other place, just keep these few pointers in mind –

Thoroughly Check The Vendor: Make sure that you do a thorough check on all your desired vendors before approaching them and entering into a contract. If possible, talk to their existing clients to get an overall idea of how the company honors its contract and treats its clients. It is advisable that you always associate with only well-reputed leasing companies with a good track record, even if the contract price is slightly higher.

Decide The Type Of Lease After Careful Analysis: Generally, you will be faced with choosing from one of the two types of leases – a Fair Market Value (FMV) lease and a $1 Purchase Option (PO) lease. The difference between the two is the monthly expenditure. An FMV lease costs less per month than a $1 PO lease. But the $1 PO lease allows you to buy the equipment at the end of the leasing period for $1. So if you wish to procure the equipment at the end of the leasing period, then the $1 PO lease may the one you should go for. But if you do not plan to procure the equipment, then the FMV lease with its lower monthly payments should be the obvious choice.

Deferred Payment Option: When you start your business, you may not have the initial capital to cover all expenditures. As such, a vendor who offers deferred payment is a blessing. A deferred payment essentially means that you only need to pay the initial lease payments after a specific period of time agreed by the vendor. So, if you need the deferred payment option, ask the vendor whether they offer it.