What are the Disadvantages?
Though there are several
advantages to equipment leasing, it has its drawbacks.
Funding is sometimes hard to obtain. Surprisingly, it can be more difficult to get a lease then to get a loan at the bank. Most lease providers require good credit histories with a credit score of 600 or more. Equipment leasing is also not an easy option for start-ups. Many lenders require that the company has been in operation for at least two years.
Only for a certain amount of equipment. Most lease providers also require a $3,000- $5,000 dollar minimum lease.
The cost is higher. Over time, the cost of leasing the equipment could end up being higher then the cost to actually purchase it. Yet when the lease is finished, the company does not own anything.
Whether equipment leasing is right for your company will really depend on your future plans and goals as well as the general nature of your business. Equipment leasing is perfect for a rapidly expanding small business or for a business that will soon be sold.
On the other hand, for business owners who have long-term goals or who are looking for equipment with a long operating life, then purchasing the necessary equipment could be the more viable option.
