One of the most important aspects of growing your company is having access to the necessary equipment to get the job done. However, financing that equipment can be a challenge. There are two main options when it comes to financing equipment: leasing and purchasing. In this blog post, we’ll explore the pros and cons of each option to help you determine which is best for your manufacturing company.

Leasing Equipment

Leasing is a financing option that allows you to use equipment for a set period of time in exchange for regular payments. At the end of the lease term, you can either return the equipment or purchase it outright. Here are some of the pros and cons of leasing equipment:

Pros:

Lower upfront costs: Leasing typically requires a smaller upfront payment than purchasing equipment, which can be beneficial if you are just starting out or need to conserve cash flow.
Up-to-date equipment: Since you are returning the equipment at the end of the lease term, you can upgrade to the latest equipment models with a new lease, allowing you to always have the most up-to-date equipment.
Tax advantages: Depending on your specific situation, leasing equipment may provide tax advantages. Speak to your accountant to determine if leasing equipment is right for you.

Cons:

Higher overall cost: While the upfront cost is lower, leasing equipment may end up being more expensive in the long run due to interest rates and fees.
No ownership: When you lease equipment, you are essentially renting it. You do not own the equipment, which may be a disadvantage if you plan on using it for a long time.
Restrictions on use: Leasing agreements often come with restrictions on how the equipment can be used, which can limit your flexibility.

Purchasing equipment involves buying it outright, either with cash or a loan. Here are some of the pros and cons of purchasing equipment:

Choosing the Best Option for Your Manufacturing Company

When it comes to choosing between leasing and purchasing equipment, it ultimately depends on your individual business needs and financial situation. If you have limited cash flow or need to constantly upgrade to the latest equipment, leasing may be the best option. On the other hand, if you have the cash available upfront or plan on using the equipment for a long time, purchasing may be the way to go.

If you are a manufacturing company owner looking to finance your equipment, Manufacture Finance can help. Our team of experts specializes in equipment financing and can help you determine the best financing option for your business. Contact us today to learn more and get started.