5 things to consider when leasing business equipment

Setting up a new company can be expensive. You have location costs, staff wages, business planning and branding. One of the biggest expenses is often the cost of equipment. Whether equipment is industrial, used for construction, or for the office, it’s a big investment.

This is why many businesses opt to lease equipment. Rather than forking out a large sum in the early days of business, leasing allows you to pay off equipment in smaller monthly payments, over a number of years. Other than minimising your start-up costs, leasing equipment sometimes gives you the option to upgrade or replace equipment when existing equipment becomes obsolete.

The drawback of taking out a lease, is that you’ll pay interest, and over time this can add to the overall cost of equipment. The other drawback is finding a suitable lease and completing the paperwork. It might be worthwhile talking to your tax accountant about available options for financing equipment when you are starting out.

If you do decide that leasing equipment is the way to go, your Mortgage Choice broker has the latest knowledge about equipment finance options, and can help you identify a suitable loan. They also help you organise the application, which minimises stress from your end.

Before you sit down with your Mortgage Choice broker, it’s worth thinking through what it means to take out a business equipment lease.

1. What equipment do you need?

Research what equipment your business requires. Know the latest models, and read reviews. Consider warranty and repair options, delivery options and set-up options. Consider when and how you will need to update or replace equipment when current equipment becomes obsolete.

Research comparative prices, so you get a reasonable deal.

2. Identify your company’s equipment budget

Know what you can afford to spend on equipment monthly, and whether you have a budget to purchase equipment outright.

3. Consider the lease process

Once you do decide to lease business equipment, ensure you have your company’s financials to hand, and any other paperwork your Mortgage Choice broker needs to help you complete the application.

4. Get to know your entitlements

Discuss lease options with your Mortgage Choice broker. Get to know comparative interest rates, application fees, and find out what support the lessor offers.

Enquire about payment flexibility, if your company’s cash flow is unsteady.

Enquire about payout options. Some companies allow you to purchase equipment at a good price once the lease period ends. Compare these figures the cost of replacing outdated equipment, and consider your company’s needs. For example, if computer models are obsolete in a year or so, it may be more practical to lease new equipment.

5. Research credibility of the lessor

Rates and terms differ between lessors. Get to know different lessors to gauge credibility. Read customer satisfaction reviews, and check accreditation. It’s also worth finding out how much support the lessor offers, if equipment breaks before the lease ends. Enquire about warranty policies, and technical support available to you.

Doing your own research and chatting with your Mortgage Choice Broker will help to ensure you find the most suitable option for leasing business equipment, or identify whether another finance option may be better suited to your business needs.