Acquiring an Equipment? Find Out Which Financial Options Is The Best for You
Purchasing new equipment can be a big investment, no matter the business size. Fortunately, there are options to consider when you’re in need of a new machine. The best way to move forward is to take time examining your financial options—it will benefit your bank account in the short and long term. The most common means of acquiring equipment are renting, financing or leasing, each has its pros and cons.
1. Renting
Pros
If you need a piece of equipment but do not want to own it, then renting works well. It allows you to access the equipment so you can use it to get the job done with no commitment to keep it. You can try out a machine to see if you like it.
Cons
There are some downsides to renting, though. You aren’t investing in the equipment. Your machine rental payments will not increase your capital in the long run and it doesn’t build equity. That means you may still need to invest in another piece of equipment in the future, depending on your circumstances.
2. Financing
Pros
Financing equipment can also be a good option, especially with low interest rates. It works well for contractors who may not have the funds to purchase an equipment right away, but still want to buy a machine. Financing is borrowing the funds to buy the machine and then paying back the money in instalments. The benefit to financing is investing in equipment that you own, and it gives you time to pay for it in small doses over time.
Cons
The downside is taking on debt until you pay it off. Plus, it’s important to note that you will also pay interest.
3. Leasing
Pros
The third equipment acquisition option is leasing. In this situation, you lease and use equipment from your dealership for a defined renting it over a period of time in return for fixed rental payments. The terms are typically written in 12-month increments with preset hour limits.
On the surface, leasing may seem like renting, but it can provide more benefits and with the possibility of additional investment. With leasing, you get access to new equipment, often pay a lower monthly price and have options for your financial commitment level.
If you choose to lease a machine and end up wanting to buy it, you will know what the predetermined price will be at the end of the lease term. On the other hand, if you decide not to buy the machine, there is no commitment at the end of the lease.
Cons
Your business can be locked into inflexible medium or long-term agreements, which may be difficult to terminate. The leasing agreements also can be more complex to manage than buying outright and may add to your administration capacity.
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There you have it, the 3 equipment acquisition options to choose from. And with Popmach as the largest machinery marketplace in Malaysia, we have all 3 options available! You can do short term rental, long term lease and purchase, hassle-free. Talk to our professional team to discuss which option is the best for you!
To browse equipment for purchase, visit popmach.com
To enquire for equipment rental, visit popmachrental.com
Article source: Construction Business Owner & NI Business Info
