Most businesses require a significant amount of equipment in order to function effectively. However, owners have the dilemma of whether to purchase or lease the equipment they need. Buying equipment gives you outright ownership, while leasing involves a smaller upfront payment and more flexibility concerning upgrading or purchasing. Here are some tips to keep in mind if you are considering equipment leasing.
Review Your Personal Finances
Prior to approaching a provider of equipment financing, go over your credit report and other personal finance information. This will make it easier to explain any issues that the provider brings up.
Update the Credit Report of Your Business
Study your business credit report carefully before contacting a lease provider. Be sure to correct any errors and update your company’s financial information. Be ready to explain any details that appear to be negative.
Know Why You Need the Equipment
The equipment leasing provider you approach may ask you how the equipment you request will assist your business. Be prepared with financial projections that emphasize cost savings and additional revenue.
Do not immediately accept the first terms you are offered. Instead, carefully compare the terms, rates, fees, and other details offered by the equipment leasing company and by your own bank.
Submit One Application at a Time
Avoid simultaneously applying for equipment leasing to several providers. Instead, carefully research possible providers and select one that generally works best with businesses in your particular industry.
Bundle the Leasing
If you need to lease several types of equipment, try to combine them in one lease with a single monthly payment. This may turn out to be more cost effective.
Be Aware of the Differences Between Lease Types
A capital lease allows you to purchase the equipment at the end, while with an operating lease, you return the equipment when the lease is up. Operating leases make sense with high-tech equipment, which continually needs to be upgraded. A fair market value lease provides lower monthly payments, but a $1 purchase option lease has higher payments but a lower price to purchase the equipment at the end of the lease.
For more advice on equipment leasing, contact BT84 Commercial Capital & Business Solutions.