Whether you own a business, manage a construction site, or are just an average Joe, you should always evaluate your current situation and capabilities when acquiring equipment. Cost always seems to be the #1 factor most people look at when comparing but there are several things to consider before you make your decision. We have created a basic pro & con list regarding leasing vs buying to help get you started!
- If you work within an industry where having the latest and greatest model of equipment is important to the efficiency of your business, then leasing equipment will allow you to do just that. By choosing to lease you can acquire updated technology easier and faster. Leasing allows you to avoid being stuck with outdated equipment.
- Leasing is less expensive up-front because rather than having one large lump sum to purchase the equipment, you have “easy” predictable payments. Which can make it easier to budget for the equipment over time.
A lease can be structured to include maintenance. If you chose to include maintenance and something breaks or issues emerge from normal wear and tear, the leasing company is then responsible for maintenance, not you. This means that all maintenance expenses fall on the company from which you leased the equipment.
Leasing is often 100% tax deductible as an operation expense under the 179 IRS Tax Code.
Flexibility comes with leasing because it offers more options when it comes to the type of equipment you’re needing. You aren’t restricted to only one type of equipment, so you have the ability to make changes if you find a different type that would be better for a job.
- Over time, leasing can end up more expensive than purchasing. So be sure to consider the amount of time you will be using the equipment when choosing between leasing or purchasing.
- Not owning your equipment gives you zero equity. Which means that you will not have the ability to sell it at the end of it’s use, so there is no potential to make money back.
- The terms of a lease could be longer than you need it for. A strict contract could leave you with equipment longer than it’s needed, resulting in money and space wasted.
- The availability of equipment could be limited. Your first choice of a brand or specific model could be unavailable, potentially causing you to settle or wait until the equipment you prefer is available. Also if you need a change in equipment type or amount oftentimes lease agreements have built in penalties for situations like that.
- By owning your equipment, you are entitled to make any modifications to the machine. Owning also means maintenance is your responsibility so you can make sure that issues are resolved ASAP. This means you won’t have to wait for a leasing company to resolve the issue or approve the needed maintenance.
- Buying can be easier because there are no agreements and contracts you must follow. You decide what type of equipment you want, make the purchase and its then yours to do what you please!
- If you own equipment, you have the ability to sell at the end of it’s use, allowing you to recover some of the cost spent.
- You have complete control over what type of equipment you get because you aren’t limited to what is available at a leasing company. If there is a specific model/brand in mind you have the ability to find exactly that.
- When purchasing equipment, you will have a higher initial cost compared to a lower monthly payment that comes with leasing. It could prove difficult to pay for expensive equipment all at once. These high costs may keep you from purchasing the equipment you want and cause you to settle for something more affordable.
- Technology is forever being updated which could mean the equipment you buy today will be technologically behind equipment issued in the years to come. So as an owner of equipment you should decide whether to continue to use it, try to repair/update it, or sell it.
- When owning equipment, you are fully responsible for all maintenance. This always has potential to be pricey and could become too expensive to repair. You could end up with equipment that cannot be repaired or sold, so be sure to look out for any product warranty that could cover your repairs and the amount of time it covers.
We proudly sell, rent, and service all types and brands of equipment and would be happy to assist you. If you have any questions regarding leasing or purchasing contact a Hugg & Hall in your area to speak with one of our Equipment Specialist!