Should I rent, lease or buy equipment?

Lease Agreements

 You’re an ideal candidate for leasing equipment if you have an established business operation and a demonstrated history of good relationships with lenders. Leasing makes business sense only if you can count on a workload that will support payments throughout the entire term of the lease.

Leasing solutions offer a lower monthly payment than rental rates and loan payments, with little or no money down. While this can be beneficial if cash flow is tight, your equity in the machine will build at a slower rate than a loan. Ultimately, this does add to the total cost of ownership if you decide to purchase the machine at the end of the lease.

If you decide to lease, you will be responsible for both preventative and unexpected maintenance costs on the equipment. To reduce the risk of unplanned expenses, you can add a service contract or Cat Customer Value Agreement (CVA) into your monthly lease payment.

A lease lets you bring in modern equipment with less variability in costs. And when it comes time to replace the machine, end-of-lease options offer the ability to avoid the risk of price fluctuation in the used equipment market.

Utilizing rental and leasing solutions can make it easier to match your equipment costs to ever-changing business conditions. You can adapt your operations to your anticipated workload by combining a core group of machines that are used more consistently with rented or leased equipment used less often.

Outright Ownership

If you’re looking for a new machine because you have a consistent, long-term need for it, then buying may be the best option. A fully amortizing loan offers the lowest total cost of ownership for the long term when compared to leasing or buying and you will build up equity faster. Although you are responsible for all ongoing maintenance requirements, asset depreciation may allow you to recover some of these costs.