Purchasing equipment for the operation of your business gets expensive. Whether you have been in business for years or are just starting out, the cost of heavy equipment is often more than you can bear. When this happens, you should turn to heavy equipment leasing options and here are 4 reasons why:
Though you are essentially paying for the heavy equipment, your upfront cost is low. Buying equipment in full can often be inefficient because of their overall expense. An expense that often requires collateral like putting up other paid-off equipment or a large downpayment.
This puts your business at risk. If something were to cause you to miss a payment, you then forfeit the new equipment and any collateral put forth. Leasing requires small payments over a specified amount of time without fully committing to the equipment.
Another wallet-friendly perk is that you can lease the latest equipment on the market without spending a fortune.
2. Less Hassle
Unlike dealing with the banks, leasing companies are more flexible when lending. Though leasing companies still require proof that you can pay for the equipment, you do not have to turn in business plans to them as you would when applying for a small business loan.
Another hassle that can be avoided by leasing equipment is being passed over on job bids due to aging equipment. Even if you were in compliance with the job's budget, companies with the latest technology and equipment are likely to land the job.
You also do not have the hassle of constant maintenance of the equipment. Through many leasing companies, you are supplied with "loaner" equipment should something go wrong with the equipment you currently have under contract.
3. Easy Upgrades
Unlike buying equipment outright, leasing equipment allows you to turn in an older model machine for a newer one at the end of your lease. Heavy equipment loses it resale value after operating hours are used, making it difficult to trade or sell used equipment for a good price. Leasing heavy equipment allows you to upgrade to the latest models of equipment once your current lease is up.
This keeps you in direct competition with other job bidders. It also increase your chances of landing more jobs.
4. Tax Breaks
Leasing heavy equipment potentially comes with nice tax breaks helping to further save money. For example, you could potentially receive a tax break on Section 179.
Equipment leasing is considered a business expense and can easily be written off each year.