Heavy machinery can be expensive regardless of whether you’re buying or renting. Considering that your business will require such tasks as transportation, you must find a viable option for purchasing. Thankfully, there are financing options in the form of loans and leasing, where you can pay for your heavy machinery in instalments.
The benefits of financing heavy machinery include saving money, flexible options for payments, disposal and resale, and security. Whether big or small, your business can utilize financing to allocate costs elsewhere or back into the business, rather than spending it all on equipment.
Lease vs. Loan: What’s the Better Option?
If you’re financing your equipment through a lease, you will pay a monthly fee, as if you were renting, and will be given an option to purchase the machinery at the end of the lease term.
On the other hand, a loan provides the option to submit monthly payments towards the purchase, resulting in outright ownership at the end of the term.
The best option for you depends on the heavy machinery you’re looking to finance. For short-term projects, leasing is the better option, whereas leasing is a better fit for machinery that will become outdated relatively quickly.
Rather than spending your capital on purchasing machinery outright, your business can finance such and allocate the money toward increasing inventory and hiring staff.
Regular payments over a term are sometimes more helpful than paying outright because it gives you the flexibility to spread the capital across your business. By preserving your wealth, you don’t have to stress as hard at the thought of the return that the machinery will provide.
You can budget and work with your lease term to provide payments with leasing. This allows you to grow while still keeping your line of credit.
Flexible Financial Solutions
Often, you can find a financial solution for equipment financing that is flexible and tailored to your business’s finances. Especially with leases, you can find an option specific to your cash flow and tax needs.
Purchasing your equipment all at once does not consider future risks like your business becoming obsolete or your industry facing massive layovers. These are enormous risks that can affect your financial standing. With the support of financing, you can focus on your business as a whole rather than focusing too hard on just the equipment.
Management of the equipment is a significant task to consider. How much of your time are you willing to dedicate to building resources to manage and sell your old equipment? With financing, you can outsource the management to the financing company, and they can handle the disposal or resale.
Hedge Against Inflation
You can hedge against inflation by financing the machinery since your payments are spread out and not spent all at once. Most financing companies will absorb the cost of the inflated rates in due time. Although it may seem that inflation is not a significant risk and that it is unlikely, it has a way of popping up throughout your financial growth. You may not see it as much with smaller purchases, but it’s evident with heavy machinery.
Avoid the stress of unexpected bills and consider financing your machinery. The flexibility and security of financing allow you to dedicate more time to the growth of your business and your team and build up your resources and client base. It’s essential to consider the future and all potential risks; with financing, you can eliminate the financial stresses that would otherwise creep into your business.