Businesses across countless industries have regular needs for substantial machinery and other equipment. If you’re in the construction industry, healthcare, the food industry, manufacturing, or any other relevant line of work, heavy equipment may be a regular part of your workday. Of course, machinery is often expensive and difficult to maintain. It’s thus worth considering whether equipment leasing or buying is better for your business. While the answer will often depend on the specific piece of machinery, as well as your industry, here are several questions you can ask yourself to determine what makes sense for you.
Will You Use This Equipment Regularly?
In the long run, buying is almost always cheaper than leasing. While upfront costs of purchasing equipment can be steep, the cost of regular leasing payments can grow steadily as the lease term gets longer.
If you’re debating whether to lease or buy, a significant consideration is the expectation of your long-term need for a given machine. If you need a piece of equipment for a few days or only to complete a brief, specific job, equipment leasing probably makes more sense. Alternatively, if you have an indefinite need for a piece of equipment — and the ability to make the necessary down payment — a purchase might be more favorable.
Are You Prepared for Equipment Upkeep?
While a purchase may generally be more cost-effective over time — and may offer the personal satisfaction of ownership and responsibility — owning equipment does mean you will be responsible for any maintenance needs that arise. Repair work does tend to be necessary over time with heavy equipment, and costs can sometimes be substantial and unexpected. Equipment leasing does, at least, give you the peace of mind in knowing that the lender, not you, will be on the hook for any needed repairs.
How Does Business Expansion Factor into Your Decision?
Though it may not seem like an immediate concern, the choice to buy or lease may have ramifications for business growth. Purchasing equipment can be expensive, but it’s also a major, tangible investment. Purchased equipment can be leased to other businesses, for instance, or used as collateral for a future loan. Consequently, purchased equipment has future growth potential even apart from the specific tasks for which it is used.
Determining whether to buy or lease a piece of significant equipment is a major decision for a small business. Ask yourself the questions above — and conduct research on your own — in order to decide what makes the most sense for you.