How to decide between renting or buying equipment for your business?
If your business needs equipment for a short period of time, to increase capacity during a busy period or because that one project needs specialty equipment, then renting the equipment is your best option. Renting gives you the flexibility to chose specific items for just the amount of time you need it.
If you’re going to use equipment for a long period of time and on several projects in a row, however, you’ll probably want to either lease or buy the equipment. In this article, we’ll be discussing the advantages and disadvantages of leasing and purchasing equipment to help you make better buying versus leasing decisions.
Even if you need to take on a loan to invest in new equipment, it might be worth it.
Advantages of buying equipment
Buying your own equipment is definitely appealing in terms of total costs, tax benefits and the fact that once you’ve paid for it, the equipment is yours.
Disadvantages of buying equipment
The large initial costs will, however, have a significant impact on your cash flow. That’s why buying equipment isn’t the best option for every business.
You’ll also have to take into account the additional costs for maintenance, repairs and replacement of obsolete or broken assets.
So, what’s it going to be:
buying or renting?
Deciding whether to lease or buy business equipment is a matter of weighing the pros and cons. Determine which option is most cost-effective for each asset you’re considering by calculating its net cost, taking into account the tax benefits and the resale value.
If you’re thinking about buying your equipment, don’t forget it might become obsolete, especially if it involves state-of-the-art technology or software. If you’re leaning towards leasing, make sure you’ll actually need each piece of equipment for the entire leasing period – or at least a large part of it.