Commercial Equipment Leasing vs Equipment Loans

commercial equipment leasing loans

The Pros & Cons of Equipment Leases and Loans

More than likely, you’ve done some research as to what’s the best way to get money for your equipment. You’re probably deciding between commercial equipment leasing or equipment loans. No matter the choice, First Capital is here to help you decide between the two. First, let’s discuss the differences and benefits these two have to offer.

Commercial Equipment Leasing

Pros

  • Immediate Access to Needed Equipment
  • Smaller Deposit than a Loan
  • Keep More Cash on Hand
  • Potential Tax Deduction (Section 179)
  • Great Way to ‘Try Out’ Equipment
  • Keep Equipment Up to Date
  • Potential repair coverage

Let’s start with the good things. You’re looking to get the equipment, but you need it immediately. This is a great way to jump start your business. Leasing is also a great way for you to keep some extra cash in your account when you need it most. The monthly payment is also lower than an equipment loan, which is always a plus. Did we also mention the low down payment? Not to mention the great Section 179 for a tax deduction. You’ll save some cash through leasing.

Commercial equipment leasing is also a great way to see if you really want to equipment or not. Think of it like a test run. With leasing, you make the usual payments. But at the end, you decide whether or not you want to buy the equipment. It’s a “safer” way to see if the equipment is right for you and your business.

Cons

  • Do Not Own
  • Not Building Capital

Now, let’s talk about the downside. This can be considered both good and bad. The equipment is not really yours. It’s good because if there are damages to the equipment, some leases do provide maintenance. The bad thing though is that the equipment is not really yours until you decide to purchase the equipment. That also means that if you do decide to keep the equipment, you have to make a residual.

Equipment Loans

Pros

  • Ownership
  • Potential Tax Deduction (Section 179)

Equipment loans also have a few perks to them. When using a loan, you own the equipment at the end. Another plus is that equipment loans do help is with the section 179 in taxes. You get write off, which is oh so nice.  A loan also has a lower tax saving than a lease.

Cons

  • Larger Down Payment
  • Higher Monthly Payments
  • Responsible for Repairs

Now, the not so wonderful perks of loans. You do have to make higher payments with a loan than you do for a lease. Also, the equipment is yours. This is also good and bad. It’s good because, well, it’s yours. But it’s bad because. well, it’s yours, which means you have to make the repairs if need there be. If you end up not liking it, you can’t just give it back because… it’s yours.

Get the Equipment Loans and Leasing You Need Today

In the end, it is all up to you. Commercial equipment leasing and equipment loans both have their good and their bad. Sometimes leasing is a better option than a loan and vice verse. It’s up to you to decide which one is best for your business. We cannot make the choices for you, but we can guide you and help you decide which is financially best for you and your business.

If you are looking to continue your equipment financial journey with an equipment lease or loan, call us today at 888-565-6692 or apply online for a free evaluation.

Commercial Equipment Leasing vs Equipment Loans | First Capital Business Finance



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