Equipment renting versus buying: what is best for your business?

Content provided by a guest contributor.

Having up-to-date equipment for your business is imperative to its success. This is true of any industry, from IT to construction companies, and everything in between. But it can be costly to keep upgrading such equipment each year in order to stay on-trend. This is where business asset buying and business asset renting comes into play, and either can be helpful depending on your situation.

When you are looking at business asset buying vs. renting you should weigh the advantages and disadvantages. For example, when leasing the equipment you are able to update it as soon as your lease is over, or simply return the equipment once the lease payment period is over.

However, with some leases, you will also be required to pay interest. If you buy the equipment, you will own it and will be able to sell it, meaning it could make you money in the long-term. Read on below for more information on renting versus buying an asset.

You can easily update equipment

If you work in the IT industry, renting equipment might be the ideal choice for you. You might need to upgrade your equipment regularly, which makes leasing a cost-effective choice and one which saves time and effort.

You will not have to continue using outdated equipment, but you might be able to purchase the assets once the lease period is over. Some rental solutions do not allow this, so be sure to read the terms and conditions. Renting is suggested for staying ahead of the competition but you might pay higher premiums for some pieces of equipment, so consult with your adviser about this.

If you own it, you can alter it

One of the pros of buying equipment is that you will own it and be able to make any necessary alterations to the equipment. This also pertains to the maintenance of the equipment, as you can make any repairs or replacements as soon as you need them done.

You will be able to make changes to the equipment as you see fit, without having to worry about this increasing your lease payments. For a small business, this will be beneficial for any cash flow issues you may be experiencing, as you will not have to worry about an increased monthly payment. You will need to research the cost of this maintenance and ascertain whether or not you can afford the extra costs.

Leases must be paid even when the equipment is not in use

One of the downsides of leasing equipment is that you might have to pay for the equipment for the duration of the lease, even if you are not using the equipment. This can make it a very costly investment, especially if you only needed the machinery for one project.

If your business model should change, then having to pay for equipment you are no longer using can be financially unsustainable. You will need to consider this before you sign a lease on any piece of equipment, and be sure you know exactly how long you will be paying the lease amount for. This way you will not be caught unaware and have to pay for equipment that you are no longer using.

Buying might mean high initial costs

Buying equipment can be costly initially if your business has to take out a loan or a line of credit in order to make the payment. You may have needed to use this initial loan for other areas of your business that need immediate attention, such as marketing or improving your inventory.

You might find it difficult for you to pay these upfront costs all at once, meaning that you might need to settle for lower-cost alternatives. These alternatives might not work as well as their more expensive counterparts which means you will need to repair or replace them more often. Look at your budget carefully and decide on whether or not you can afford these initial expenses.

Weigh up the pros and cons

Renting equipment might be the perfect solution for those who need to update their equipment regularly. You will be able to rent new equipment as and when you need it, choosing only those pieces which relate to your current project. But, you will need to continue repaying the lease even if you are no longer using the equipment.

If you decide to purchase the equipment, you will find that you are able to alter it yourself without worrying about waiting for approval to do so. This makes it easier to upgrade or repair equipment in times of urgency. Weigh up the pros and cons and you will be able to make a decision that is right for you.


The content in this article was provided by Rogerwilco – a South African marketing agency based in Cape Town.

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