What You Should Know About Equipment Leasing

In today’s rapid-response, instant-gratification world, almost anything can be leased. From appliances and furniture to heavy equipment and warehousing, you can lease whatever you need for yourself or your business. In fact, ELFA found that up to 80% of US companies actually lease at least some of their equipment. If you are starting a small business and don’t have a lot of initial outlay cash on hand, you may consider equipment leasing. These are some things you should know about this process.


Because you are not purchasing your equipment, you do not gain an asset, but leasing your equipment ensures that you have the latest model with the most up-to-date technology. For example, computer equipment becomes obsolete quickly, but if you lease your computers, you can upgrade them at the end of your lease term. Therefore, you can have new equipment every year if you choose.

You also have lower monthly payments on leased than on financed equipment. Your finance rate is also fixed, and you gain tax advantages. You don’t have to provide large cash down payments, so you maintain positive working capital.


Although you get the most up-to-date equipment, you will actually pay more over the long term by leasing your equipment than by purchasing it. In addition, these assets are not yours and cannot be added to your balance sheet. You are also required to fulfill your contract, so even if you no longer need the equipment you leased, you still have to pay for it every month. Seasonal companies and those in flux may feel the greatest impact of this requirement.

Learning About Leasing Sources

If you are interested in equipment leasing, you need to investigate providers. First, you should know who you will be working with and whether the leasing company will finance the lease as well. Ask about the company’s longevity as well as their terms and conditions at the inception and conclusion of the lease. Discuss insurance and personal property taxes on the leased equipment. Find out about upgrading your equipment at the end of the lease. Finally, discuss maintenance and repairs.

Developing Your Leasing Strategy

Before leasing any equipment, you should ask yourself a few questions. First, what type of equipment do you need? Also, identify how long you will need this equipment. Does this address your company’s future needs? Also, you need to determine whether you want to pay for maintenance services, training and supplies separately or include them in your leasing contract. Finally, determine your budget and the total and payment costs you will incur.

Only you can determine whether equipment leasing is right for your company. Study the company and leasing agreement closely and compare your costs before signing on the dotted line.

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