Lease Equipment or Buy Equipment?

In the business world the greatest challenge is keeping up with the current times. Things change and to remain competitive in todays business climate it is important to update your equipment to survive. The cost associated with the purchase of new or used equipment can be overwhelming to a business owner or company executives.

There are many factors to consider in determining when to buy or lease equipment. One of the most important factors to consider is your business plan. Your business plan should outline what type of services you will need to offer for the next five to ten years.

One factor is estimating cost of equipment the company will need to be competitive in your marketplace. Do you pay cash for the equipment or do you lease the equipment?


8 out of 10 businesses choose to lease equipment. Most businesses put their capital back into the business for operations. Business owners would prefer to pay cash for their equipment out of capital reserves or by using the companies bank line of credit but this is not the bettter way to go when you look at the overall picture of Equipment Leasing and it's benefits and advantages.

This bring us to the big question..


Do we Lease the Equipment or do we buy the Equipment?

Weighing the pros and cons of leasing versus buying the new equipment you have to keep several things to in mind here. The cost is more than comparing the lease dollar amount versus the cash purchase price of the equipment.

You have to look at the lease payment based on the most fesable lease term for your company.

You have to look at the income that will be earned from the equipment or the savings the equipment will bring the company. If the income that can be earned from the new equipment covers the lease payment and earns a profit after making the lease payment then Leasing the Equipment is the way to go because no capital has been used from company reserves or credit lines other than the required first and last payments to start the lease.

The Lease payment is fixed monthly which is easier to budget that a huge outlay of capital. Using cash reserves to buy equipment outright reduces the capital on hand for other operational cost. Keep this in mind when trying to decide whether to Lease Equipment or not to Lease Equipment.

Consider all the lease terms available, have your leasing represenative give you a lease proposal showing you all of the terms and payment options available.

If you are looking for the lowest payment and are not concerned with owning the equipment at the end of the lease I would recommend a Fair Market Value lease. This option give you the lowest payments and if the equipment is outdated at lease end you give it back to the leasing company servicing the lease and you Lease or buy the most recent version of the equipment you need.

If your company is more concerned with owning the equipment at the end of the lease I would recommend the $1.00 buy-out Lease, with this option your company will own the equipment at the end of the Lease for $1.00 whichever Lease purchase option you decide is best for your company Equipment Leasing is by far the best way to go for adding equipment your company needs because of capital conservation. No capital outlay!