Some longtime business owners have a real problem with leasing. For many, their parents taught them to prioritize saving money above all else. This is one reason they’re successful entrepreneurs. The only problem is that in modern business, and especially where equipment financing is concerned, thinking only in terms of interest rates can sometimes be the wrong decision. Why is that?
First, it’s good to highlight the positives of equipment loans. Getting a loan for your business equipment can indeed be the right choice. Loans typically have far lower interest rates than leases, so they can save you a lot of money if you’re looking at the long game.
This type of financing can be perfect when you want to purchase a piece of equipment that is going to last your business a long time. For example, some construction companies that are going on 10 or 20 years in business still have the same heavy machinery they started with. They probably paid off the equipment years ago, so everything else is just icing on the cake. With these benefits, why say that sometimes a loan is the wrong choice?
Many companies, and small businesses especially, have to think about the calendar just as much as total costs. It’s true that when you’re looking 20 years into the future, a loan is going to look more attractive than a lease. But what if you’re focusing on this year or the next? Leasing is probably going to win out.
This is because equipment leases tend to have fewer requirements, fewer catches, and fewer immediate costs. They offer lower monthly payments. You don’t have to pay for repairs. You may not need any down payment. All of these benefits can be a huge help for your business’s cash flow.
To determine what type of equipment financing is right for your company, you have to be honest about your current needs. What could you do with the money you save each month by choosing a lease? Would you be able to invest in better marketing, a website, training, or additional employees?
If putting your money to use in these ways helps you generate far greater profits than before, then a lease was the right decision for your business. In 20 years, you may make far more money this way than the amount you would’ve saved with a loan.
Andrés GuzmánOctober 4, 2023My experience was nothing short of outstanding. PRM exceeded my expectations in every way.
ARMY 4LIFESeptember 29, 2023They have the best customer service! They treat you like family 😊
Mari M VelazquezSeptember 27, 2023The best company to do your loans with! Highly recommend it 😊