As you start your new business, you may need to lease equipment for the first time. While leasing equipment is similar to leasing a car, there are certain key differences you need to understand that offer you more flexibility than what is offered to those who obtain a car lease.
A Down Payment Is Unnecessary
You often do not have to put money down for a lease for commercial equipment. When you put money down, you will reduce how much you need to pay in the long-term. However, if you need the cash for other reasons, you may wish to simply keep it in your account.
You Can Often Add Onto The Lease
You can often add onto leases. For example, if you'd like to use a piece of equipment for an additional year, your agreement can often be extended. Also, there may be additional maintenance agreements or bonus pieces of equipment that can be added for a small fee.
Collateral Is Not Required
Just because you are asked to put more collateral down on a loan, doesn't mean that the lenders won't allow you to finance commercial equipment if you refuse. Collateral can affect how low your interest rate is, but you can still choose to forgo collateral and give yourself the peace-of-mind knowing that you will not have to turn over your accounts receivable or a free title if you can't make your lease payments.
You Can Control When You Make Your Payments
Setup your payment plan so that it is coordinated with when you pay the rest of your bills at the end of the month. As a business owner, you will want to find ways in which you can reduce the number of hassles that you need to worry about.
You Don't Have To Pay Taxes Upfront
If you do not want to pay taxes upfront, consider having the taxes rolled into the loan. Lenders will usually prefer that you pay taxes upfront, since they do not want to begin with negative equity. However, many will relent and roll your taxes in as a way to build your relationship.
A Long-Term Lease Isn't Always The Most Economical
Leasing for the longest term tends to save you money in the short run, but you need to consider how long you will need the equipment and any maintenance costs. If you simply have to hold on to your equipment until the lease expires, you will lose money. If you can afford it, you may want to select an option that has the lowest interest rate rather than the option that leads to the lowest first-time payment.
For more information, contact a equipment financing consultant.