Leasing vs Buying: What is the Better Option for Business Equipment?
From construction to mining, among other industries, equipment is one of the most important investments. It is often expensive, especially if you are opting for one with the highest possible quality. You have two options for equipment acquisition – buy or lease. Which one is better? Keep on reading and we’ll weigh the pros and cons of the two.
Leasing is renting equipment to use in your business. You will need to make periodic payments to the equipment owner. Below are some of the benefits of leasing business equipment:
- Economical: If you need equipment but you do not have the capital to buy brand-new, leasing is a financially-sound alternative.
- Easy to Upgrade: You can change leased equipment yearly or as you wish. Once the lease agreement is over, it is easy to switch to the most technologically-advanced equipment available.
- No Maintenance Costs: If the equipment breaks down, the owner of the equipment is responsible for handling the costs for repair and maintenance.
Nonetheless, leasing also has its disadvantages, including the following:
- Does Not Build Equity: If your goal is to build equity, that won’t happen when you are leasing equipment.
- Pay More in the Long Run: This isn’t ideal if you intend to use the equipment in the long-term. You will end up spending more, and the worse thing is that you do not even own it.
As against leasing, buying involves having to pay an upfront cost. Although, as a way to ease the financial burden on the buyer, the purchase price can often be paid in installments. Here are some of the benefits of buying business equipment.
- Ownership: The best thing about buying equipment is that you have the right of ownership. You can list it as a business asset.
- Tax Benefits: Because you own it, you can also claim for deductions, which can minimize the tax you will need to settle. From depreciation to insurance, there are different expenses that you can include in your tax deductions.
- Freedom: When you own business equipment, you will have the freedom to use it as you wish without restrictions. In contrast, when you are leasing, there can be some limitations.
However, it also has its drawbacks, including the following:
- High Initial Cost: The biggest disadvantage of buying equipment is that the initial expense is steep.
- Equipment Can Become Obsolete: Your equipment can quickly become outdated. With the introduction of new technologies, you might end up being stuck with old equipment.
In sum, no option is better than the other. Buying is good if you have the money and if you will use the equipment in the long run. Leasing, on the other hand, is a great alternative for the equipment you will use only temporarily and if you do not have the budget. Luckily, some companies like Bosstek, a provider of dust and odor control equipment, offers both the option of buying and leasing!