Comparing the purchase price with the cost of leasing over the projected life of the equipment is a good starting point. You may also examine the risks and benefits from multiple angles by asking questions such as:
- How much investment capital is required?
- Does buying vs. leasing equipment affect cash flow?
- How will maintenance and repairs, including the associated costs, be handled?
- When will the equipment need to be upgraded and at what cost?
- Could there be issues related to compliance with industry regulations when upgrading or retrofitting equipment?
- Will there be costs to re-sell, recycle or dispose of the equipment when it is no longer useful?
Minimize Risk, Maximize Benefits
Leasing equipment rather than buying may help manage risks while capturing the following benefits:
Lower capital output: With a lease, your sources of capital aren't tied up in equipment, so you can invest in other areas of the business. A lease typically does not require a down payment or collateral.
Flexibility: With a lease, you have more freedom to scale up and down as your business and equipment needs fluctuate. Leasing allows you to respond quickly to new opportunities by getting the right equipment in place quickly. By matching the term of equipment leases with the term of your office space lease, you may reduce the risk of having to move or store equipment in another location.
Business workflow: When you own equipment, you may be responsible for time-consuming maintenance or upgrades that may result in costly business interruptions. Leased equipment tends to be replaced or tuned up on a regular schedule to help ensure operations run smoothly.
Reduced asset risk: When you lease equipment, you may avoid some of the risk management headaches associated with equipment purchase, such as equipment malfunction, regulatory issues and disposal of equipment at the end of its useful life.
Review Options for Financing
Schedule a review with one of our business bankers to find out if leasing would work well for your business.