5 Reasons to Finance New Equipment Instead of Buying It
When you need equipment for your small business, your first idea might be to buy it. However, even if you have the cash available to make a large purchase, there are several reasons why it might be in your best interest to finance equipment instead.
- Keep Other Funds Available
You may have the cash to cover the cost of the equipment you need, but that doesn’t necessarily mean that you should buy it outright. Emergencies and unexpected expenses can come up and, if you have spent a large amount of money on equipment, you could find yourself in financial trouble. Taking out a loan allows you to purchase equipment without using up your savings.
- Easily Upgrade Equipment
If you work in a field where technology is rapidly improving, then your equipment could become obsolete in a short period of time. Leasing instead of purchasing equipment is one way to avoid falling behind your competitors. With a lease, you rent the property instead of owning it so when you reach the end of your lease term, you can choose to upgrade to something newer and better.
- Predictable Monthly Expenses
Buying new equipment can have a huge impact on your cash flow, affecting your budget for a long time. When you finance equipment, this is less of an issue. Whether it is with a lease or a loan, your monthly payments will remain steady. This makes it easy for you to plan your budget around these expenses.
- Less Complicated Disposal
Over time, equipment becomes less reliable and begins to break down more often. Eventually, getting something new is a better option than continuing to pay for repairs. If you are using large machinery or other electronic devices, you may not know how to dispose of them correctly. When you lease equipment, you are not in charge of disposal, giving you one less thing to worry about.
- Improve Your Credit
Another benefit of financing your equipment is one that may be less obvious: a higher credit score. When you have good credit, it can be easier to qualify for a loan or purchase property. If you make your loan or lease payments on time every month, this will help improve your credit over time.
There are many reasons to finance equipment instead of buying it outright. In many cases, it can lessen the financial burden on your business and can make it easier to get better equipment when you need it. Look into leasing and loan options to see what works best for you.