Lease or Buy – The Basics

The decision to lease or buy equipment can make a big difference to your business. But how do you decide which is best for you? Your situation may have its unique features however, the following are some things to think about.

Buying new equipment outright can often be the best decision. However, there are circumstances whereby the benefits of leasing outweigh those of purchasing.

Leasing Equipment
Aside from a reduced cash outlay, there are several benefits to leasing equipment:

  • Equipment leasing saves your working capital (bank lines) for day-to-day business expenses, business expansions, or unexpected business-related costs.
  • A lease provides you with a predictable monthly line item, which can help you budget more effectively. You can often structure your payments to meet your monthly, seasonal, semi-annual or even annual business cycles. You can then confidently develop long-term plans for your business.
  • Leasing can save you the time and hassle involved in finding someone who will extend you credit for purchasing equipment.
  • You can keep pace with emerging technology. If you want or need to stay on the leading edge of technology, leasing may be a better alternative than buying the equipment and then trying to resell it when it no longer meets your needs.
  • Short-term leases give you the opportunity to evaluate whether the equipment fits your needs.
  • Maintenance may be included in the lease, saving you additional costs.
  • If you use the leased asset in your business, you may enjoy a potential tax advantage. Check with your tax advisor to find out how leasing can benefit the tax position of your business.
  • Lease payments are considered a business expense vs. long-term debt. Low debt on your balance sheet helps you secure financing to fund your business.

Buy or Lease
If your equipment requirements are relatively small and you have the financial resources or can get a low-interest loan, then buying may be the best alternative. However, if your equipment requirements represent a significant investment, leasing may be a better option. Why commit a large amount of cash when you could use that money to further build your business?

At NRSCO we offer you the flexibility to make the buying decision that best suits your circumstances. Give us a call. We would be happy to answer any questions you may have.