Having previously describing the types of loans available to businesses (read here) and the benefits of SBA loans (read here), we now move on to the question of buying vs leasing.
If you’re looking to borrow money for your business with the express purpose of adding new and improved equipment to your operation, you really ought to consider the pros and cons of buying vs leasing.
You might think that doing one is more savvy than the other, but it really comes down to circumstance and personal preference.
It might just be the case that you are adverse to leasing, preferring to own the equipment outright. But if, for example, you are adding a new vehicle to your business, you should consider how far and how often it will be driven.
More miles tips the scale in favor of owning, while fewer miles would suggest it’s better to lease.
If you do opt to buy the item, you can spread the cost with a repayment plan, however this will typically require a large upfront cost in the form of a down payment.
And remember, by purchasing, the monthly payments will eventually end, but the item will depreciate in value during that time. Lease payments, on the other hand, will continue indefinitely until you either end the contract or can no longer afford them, and you are usually able to upgrade the equipment as part of the agreement.
Business Loans – A World of Possibilities
Short-term or long-term. Secured or unsecured. Bank or SBA. Buying or leasing.
Unfortunately, there’s no one-size-fits-all solution. When faced with the decision of borrowing money, you will have to take into consideration your own unique set of circumstances.
The points raised in this series of posts should help you make a better decision. And if you’d like to discuss the issue further, please contact us at Checkbox.