Construction companies and other businesses requiring heavy machinery may wonder about the best way to finance their equipment. Equipment leasing offers a number of financial advantages for those in the market for heavy machinery.
Find out the potential benefits of heavy equipment leasing and learn how to navigate the process from start to finish.
Benefits of Heavy Equipment Leasing
One of the major advantages that comes with heavy equipment leasing is the flexibility it allows in your cash flow. Payments are usually lower compared to loans, because you’re only paying on a portion of the equipment’s value since you won’t keep it for its entire lifespan.
You can also realize long-term financial benefits with equipment leasing.
Since you’ll return the equipment at the end of the lease term, you can worry less about maintenance and repairs as the equipment ages.
Finally, in most cases, you’re able to use your monthly lease payments as a tax deduction, helping to reduce your overall tax burden each year.
How to Compare Lease Terms
There are a couple of different lease terms to consider when comparing your options from different financing companies. First, look at the length of the term compared to the cost of your monthly payments. Make sure you can reasonably expect to use the equipment for that time period so you don’t end up paying on something you’re not even using. Your monthly payments should also make sense for your company’s financials.
Next, check to see if soft costs are included in the equipment lease. These are things like delivery or training on specialized equipment. If those things aren’t part of your equipment lease, you’ll end up having to pay them out of pocket.
What Happens at the End of Your Lease Term
Once the end of your lease term draws near, you can choose to either return the equipment or buy it outright. If you’re returning the equipment, it should be in good condition to avoid any fees or penalties. Buying the equipment generally involves paying a portion of the current market value.
Heavy equipment leasing can be a great asset to your company, as long as you have a true understanding of how the process works.