Is Leasing Heavy Equipment A Good Idea?

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If you are in charge of running a construction company, then you obviously have many decisions to make on a regular basis. One decision that you have to make is in regards to the type of equipment that your company utilizes. If your company is currently in need of new heavy equipment, then you may be wondering whether you should consider heavy equipment leasing or whether you should make an outright purchase of what you need. There are advantages to both options, and here is an overview to help you decide:

How is your business credit?

If your business credit is less-than-par, then although you will have the ability to receive approval for heavy equipment leasing, depending on where you go, but your interest rates will likely be higher. Since overpaying for equipment isn't a very sound business tactic, you may want to pay cash instead of leasing or financing.

Of course, if you can't pay the full cost upfront, then you will have no choice but to lease or finance. If you are forced to lease your new or replacement equipment, then you need to choose the finance company carefully. Even with less-than-perfect credit you can get a good interest rate, if you choose the finance company carefully.

Assess your company's needs

Before you go out purchasing every piece of equipment that your company could need, it's important to determine exactly what equipment is necessary. By making this assessment before making a purchase, you ensure that you're not wasting money by buying equipment that will never be used. 

How long has your company been in business?

New companies fail all the time, and if your business has recently been started, then you may want to play it safe and wait before entering into a leasing contract. Unless you have ample financial backing, then you never know if you might sign a contract in order to obtain equipment but a short while later you decide to close the business. Once you sign a contract, then you're bound by it, so if your business fails you will be required to continue to make payments. 

Leasing or financing heavy equipment for your business can be a good idea in most cases. It can be a great option for helping you to attain the necessary equipment necessary in order to operate, especially if you don't have access to large amounts of cash.  As long as you carefully consider every aspect of your business, its specific needs, as well as the perspective equipment finance companies, then the decision that you ultimately make should be a good one. 

For more information, contact a company like Westar Financial Inc.

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24 June 2015

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