January 11, 2008
Pros and Cons of Equipment Lease Programs
By Store in Finance | 0 comments
You may have heard of equipment lease programs, also known as lease financing, as an option for small business owners. Basically, instead of buying your business equipment outright, under an equipment lease program you can lease it for a set amount of time – usually one to five years. When you sign your initial lease contract, you agree to make a specific payment each month for the life of the lease.
Lease financing has several advantages for small business owners, including:
- Payments spread out over a longer period of time, sometimes reducing the need for small business loans so that you can purchase the equipment outright
- Payment amounts that you can count on, since your monthly payment is determined by your lease terms
- The ability to upgrade to the newest technology when your lease runs out
- The ability to only lease the equipment for when you need it, rather than buying expensive equipment that you will only use for a short period of time
- A lease-to-buy option that some equipment lease programs offer
However, lease financing isn’t for everyone. Disadvantages include:
- Getting locked into a longer lease term than you want or need, and still being responsible for those payments
- Needing to maintain the leased equipment, even though you may not end up buying it when the lease term is up
- Not owning the leased equipment, so therefore not being able to claim it as an asset, even though you are technically paying for it
Consider your options carefully before deciding to enter an equipment lease program. You may decide that getting a small business loan is worth your while, after all.
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