To Buy or to Lease? – Getting Equipment for a New Business

When considering equipment leasing as a possible option for setting up and running a business, there are several payment options a business owner can usually consider. It is best to take all equipment leasing payment options into consideration to make sure you choose the one that is best for your particular situation.

One equipment leasing payment option is known as the “Skip Lease” payment method. This type of equipment leasing payment option is usually most advantageous when a company makes more money during certain seasons. Businesses that operate during tourist seasons or during the holidays are prime examples. This type of equipment leasing payment option allows payments to be bypassed without incurring a late penalty.

Another equipment leasing payment option is known as the “Step-Up” method. This type of equipment leasing payment option usually works best for companies who find that their capital is actually contingent upon obtaining the equipment. Such an equipment leasing payment method is structured to have low payments in the beginning of the lease which will eventually become larger based on the growth of the business and its capital.

Businesses may also take advantage in some cases of what is known as a “Deferred Lease.” Deferred equipment leasing options allows companies to skip the first two to three payments in order to build capital before beginning regular monthly payments.

Regardless of the type of equipment leasing payment method you select, it is also important to be aware of the details surrounding lease termination. In most cases, equipment leasing contracts last between 6 and 120 months. The term of the lease typically depends on the business’s plans regarding what will happen to the equipment upon the termination of the equipment leasing contract.

Common equipment leasing options include returning the equipment, beginning another lease or purchasing the equipment. Careful thought should be given to all options.