Leasing equipment can offer many benefits to a business, especially over financing or purchasing outright. If you're limited on cash, you may want to opt for an equipment lease. Since every equipment lease is different, you can find the lease that suits the exact needs of your business. The following are some of the benefits of getting an equipment lease:
Cost-effectiveness: Applying for and obtaining a lease is one of the most cost-effective ways to get the equipment you need for the job. You may be able to skip a sizeable down payment and qualify for low monthly payments that are more affordable than purchasing the equipment through one lump sum payment. If your budget is limited or you want to keep costs down for a machine you only need temporarily, an equipment lease can provide the cost-effective solution you need.
Potential tax credits: Another one of the great benefits of leasing is the possible tax credits your business may be eligible for. Depending on your lease, your business can deduct equipment depreciation and interest on the lease payments as business expenses.
Ease of scaling your business: Sometimes, we don't anticipate how quickly our businesses grow. If your company grows quickly, leasing heavy equipment may be the best option. You'll likely upgrade to more advanced machines as you take on more work. By leasing, you can handle more work without needing to sell your existing equipment and shop around for replacements. With a lease, you can get the exact equipment you need when you need it, whether expanding or taking on unique jobs requiring specialized equipment.
Ease of updating equipment: When you lease a machine, you can return it once your lease agreement ends and you've got what you need. Then, you can avoid dealing with the depreciation of your investment or figuring out what to do with a machine that has become obsolete. Leasing can also be helpful if your company's offerings change seasonally or over time — you can lease a machine that's useful for a short period and then upgrade to the different equipment that suits your changing needs.
Options for maintenance and service contracts: The ongoing maintenance and its costs are something to keep in mind with equipment ownership. As machines age, they require more and more maintenance. This can mean your equipment has increasing upkeep needs over time. Some leasing options let you incorporate a service contract into your monthly lease payment. Cat Customer Value Agreements can help you maximize the uptime of your heavy equipment with a personalized preventative maintenance schedule.
To continue operating successfully and growing, your business needs to remain flexible and adapt to internal growth, industry disruptions and changing trends. This need for flexibility is why you should regularly review the options available for obtaining heavy equipment. Before you enter an equipment lease agreement, you should understand the lease modification process.
Reviewing your lease agreement regularly can help determine whether it's time to modify it. For example, review your lease agreement yearly on the date you obtained the equipment. Determine whether the equipment is still suitable for your business and whether it's enabling you to reach your goals. Sometimes, you may decide that modifying your lease to a long-term agreement or purchasing the equipment outright is the best next step.
As your business adapts to market changes or grows, your needs change. Fortunately, when you have an equipment lease, there are some parts of your lease agreement that you can modify. Depending on your lease, you may have the option to:
With this flexibility, you can avoid being locked into terms that are no longer ideal for your business.