Depending on what type of business you run, you might need specialized equipment to get the job done. Places like restaurants, printing shops, medical offices, and construction firms are all examples of businesses that require specific equipment to help their customers.

However, if you’re just starting, you might not have the funds you need to purchase this equipment. That’s where leasing comes in. In this post, we’ll walk you through the pros and cons of leasing business equipment so you can decide if it’s right for you.

Lower Upfront Costs

The biggest draw of equipment leasing is that it allows you to spread out your payments and reduces your upfront costs. Instead of having to spend $15,000 on a piece of equipment, you could put $2,000 down and pay the rest over time. This frees up some of your capital to use in other areas of your budding business.

Regularly Upgrade Equipment

Another benefit is that you’re not locked into that piece of equipment forever. When your lease is up, you can decide if you want to purchase it and keep it long-term or lease a newer item. This gives you the flexibility to keep your equipment up to date and utilize the most recent innovations in your industry.

You Don’t Own It

Despite these two pros, there are some cons. The first is that you don’t own the equipment, which means you could miss out on some valuable tax credits. Additionally, you can’t add the value of the equipment to your business, so it brings down the overall amount your company is worth if you decided to sell.

You Pay Interest

Just like with all loans, when you lease equipment, there’s interest attached. Over time, you’ll end up paying more for a piece of equipment than you would have if you bought it outright. This is an important consideration because it can affect your long-term profit margin. Before deciding to lease, carefully consider if you’d rather pay over time and pay more, or wait to save up and buy something for your business.

Choosing whether to buy or lease equipment is a decision of many different factors. There’s no one right answer for every business. However, weighing these pros and cons as you consider your options can help you better evaluate your situation and what solution will work best for you. Take your time deciding and good luck with your new business!