If you’re a startup or a business that’s been around for a while, you probably take something so vital to your operation it’s almost invisible until you think about it – your equipment. Whether you’re on the farm and sitting atop a combine harvester, or in a shop’s back office crunching numbers, you’re using some kind of equipment. But what are the advantages to leasing instead of buying? We’ll give you the top tips into leasing equipment for your business.
1. Don’t just take the lease from your manufacturer or supplier
Taking the first lease option you see is the path of least resistance. It makes some sense to take a lease direct from the supplier or their preferred lender – but that denies you the opportunity to save some money by shopping around. The quote they give you might be competitive, but nothing is competing when they’re the only one in the running.
2. Make sure the contract terms fit the equipment lifecycle
Before you lease equipment, you have to make sure your finance contract matches the useful lifespan of what you’re intending to lease. More simply, if you anticipate you’ll only need the equipment for three years, it makes no sense leasing for five years. If you need to extend your lease, ask about finance leases that offer such options.
3. Ask for varied payments that suit your cash flow
A good lessor or finance broker will allow you to structure a lease that doesn’t impede your cash flow. If you’re in the agriculture business and lease an irrigation system, you may not be using it much during the wet seasons or winter months. Cash flow may be better during harvest time which means your ability to pay will be greater. During quiet periods, you might reduce your repayments so you still have ample operational funds. Financiers should give you the flexibility to lease according to your needs, not the other way around.
4. Throw light on hidden costs and fees
When you are comparing lessors and financiers, you should always take into account fees and charges associated with leases. A great deal might not be all it’s cracked up to be when fees and other charges are involved. Make sure you get the straight talk on fees before committing.
5. Your lender or broker should be accredited – officially and unofficially
The rule of thumb is that your lender or broker must be operating at least as long as your intended lease term. You should research your lessor, lender or broker thoroughly before signing on the dotted line. Furthermore, your financier should have appropriate accreditation such as an Australian Credit Licence. If they don’t at least have an ACL, walk away!