Why You Might Want to Lease Instead of Buying

Leasing follows the same principle as renting, you pay a fee to the owners of what you are leasing to use it for a period of time. While this means you may never own this item, there are many benefits to leasing that, depending on what you are looking for, gives it an edge over buying outright.

It's Less Expensive in the Short Term

Leasing is Still Tax Deductible

If you're considering purchasing for tax reasons, you’re in luck! Leasing equipment for your business is still a completely tax deductible expense.

The Terms Are More Flexible

The terms of a lease are usually far more flexible than that of a loan. When leasing you are given options of your own terms, down payments and purchase options of the lease. You will also be able to end a lease agreement far easier than you will be able to finish paying off a loan.

It's Easier to Upgrade

When leasing, it becomes possible to switch out equipment to suit your needs. What if you buy a machine and then a task arises that it is not suitable for? Do you buy another machine? If you are leasing, you can simply stop using one and switch it out for the other.

On top of that, leasing ensures you always have the most up-to-date equipment available. Upon purchasing a vehicle, it depreciates in value the moment you drive it off the lot, and will only go down from there.  By the time you have finished paying it off, it may well be an outdated model worth a mere fraction of what you paid for it. While leasing, however, you can ensure you are always using the best equipment available. Once your leasing term ends on your machine, it will be up to you whether you use it again or swap it out for something more current.

100% Financing is More Readily Available

When taking out a loan, more often than not, banks will only lend a portion of the total cost, usually to a maximum of 80%. When leasing, you are covering 100% of the cost with no extra fees.

Rates Are Fixed

When repaying a loan, the rate at which you repay are usually floating rates that will fluctuate. As the rate changes, so too does your repayments. This can work in your favour when interest rates fall, but you’ll be stuck paying more than you agreed to should they rise.

On the other hand, except in rare circumstances, lease payments are fixed and will not change during the term of your lease.

Far Fewer Extra Costs

When taking out a loan, there are several extra costs involved, including; application fees, monthly fees, annual fees, documentation fees, encumbrance check fees, early repayment fees, late repayment fees, early exit fees and more. It can come to a lot of extra money on top of what you intend to take out. 

When leasing, on the other hand, you’ll find that in the cases of small ticket items (under $750,000) there will be far fewer additional costs, if any at all, and these costs are kept to a minimum. In comparison, these extra costs will stay around $200-$300, paid only once. The extra fees associated with a loan can be in the thousands.

In the market for a new machine? Whether you’re looking for a bus, earthmovers or even a plane, Leaselink Business Finance can help you. Contact us today.