What Should You Consider Before Leasing Heavy Equipment?

What Should You Consider Before Leasing Heavy Equipment?

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If you have concerns about taking on a contract job because you do not have all the equipment needed, you can choose to turn to heavy equipment leasing and financing. Leasing or financing your equipment is a good choice if you currently do not have enough credit line or cash flow to purchase the equipment needed up front. Regardless of how you are set up, leasing equipment works for most businesses. Here are some things you should consider about different leases and how heavy equipment financing might be good for you.


Check Out Dollar Buyout Leases


Dollar Buyout Leases works best for larger buys that are not going to depreciate anytime soon. When the term of the lease has ended, you may have the choice to purchase the equipment for a dollar. However, although it sounds like a good deal, monthly payments for the lease are going to be very high. Essentially, you are paying for the equipment’s total value throughout the lease. If you choose to enter into such a contract, you have to ensure the equipment’s value does not depreciate over time.


Fair Market Value Lease


In such a lease, you have the option to extend the lease when the term is up or just let the term end. You may also choose to purchase the equipment for its market value. If you decide to buy the equipment, the price you have to pay will be calculated by the market value minus the amount you have already paid during the lease. This option has the lowest monthly cost and is usually more flexible.


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Understanding a Sale-Leaseback


A sale-leaseback is basically selling your equipment to a buyer that leases it to you. This will allow you to have more cash on hand to spend in other areas, like financing or leasing of other equipment. However, a sale-leaseback usually has a shorter contract and higher monthly payments.


Getting a Wrapping Lease


A wrapping lease means you can add more equipment to the lease over time. People that tend to go for this are growing organizations that are still unsure of what equipment is needed to complete their jobs, or business owners who want to up-scale their businesses quickly. When new equipment is added into the lease, payments will be adjusted to include these new pieces of equipment. This means that all equipment leased will be included in one payment instead of multiple payments, keeping it easy for owners.


Keeping Updated with the Newest Equipment


With leasing, you are able to stay updated with the newest technology. When the lease term ends, you have the chance to lease new equipment, keeping your business up to date with an advantage of the newest technology.


Saving Capital


Spending a large amount of cash on expensive equipment can be scary for businesses as they are a huge financial investment. Leasing your equipment instead will allow you to keep track of how much money is going out each month, allowing you to keep your capital for rainy days. In other words, leasing equipment takes uncertainty out of the picture.


You Can Write Off Tax


Although most businesses are aware that they can write off whatever equipment they own, many do not know that financed or leased equipment can be written off as well. So, when you lease equipment you also save on the taxes you have to pay annually.


There are many benefits to leasing equipment, as well as many things to consider before leasing equipment. If you are a business owner looking to lease equipment, you can contact us to inquire more about equipment leasing for your business.


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