Planning to add new equipment to your inventory but doesn’t know how to get started? You can purchase new equipment in two different ways: leasing and financing. However, there are certain differences between the two.
The most significant difference between an equipment lease and equipment finance is that the former is organized differently and allows you to use the equipment as per the dealer’s terms and conditions, while the latter one allows you to own equipment after the installments are completed. The find out which one suits you the best, consider your needs and budget.
What Is Equipment Leasing?
A form of financing called equipment leasing in Abbotsford is used to rent equipment for a set period of time as opposed to buying it completely. Although they are both classified as equipment finance, they are not the same thing.
While financing is borrowing money from a lender to purchase equipment, leasing includes making recurring payments that go toward the use of the equipment. In other words, a lease enables you to rent the equipment rather than purchase it, whereas a loan related to finance enables you to purchase equipment and become the owner of that instrument. This indicates that ownership is not transferred at the start of a lease or during its duration.
Generally speaking, though, the lessee has a few choices at the end of the term, including the option to buy. The lessee will choose to acquire the equipment at fair market value if the purchase option is exercised at the end of the lease term.
What Is Equipment Financing?
Equipment financing in Abbotsford refers to a broad category of asset-based loans or leases that businesses employ to purchase the necessary equipment to meet their productivity and operational needs. Depending on your needs, you can either use a loan or finance to pay for the equipment all at once and then pay it back over time, or you can pay a monthly lease until the entire lease is paid.
In the event that you choose to finance the equipment purchase with a loan, you will obtain the loan from a lender, a private or public entity, or financial institution, and use the money to purchase the equipment.
The lender may be able to provide the borrower all of the money required to buy the equipment, but occasionally they might ask for a down payment. The down payment may be as much as 30% or as little as 10% to 20%. You will be responsible for paying the remaining upfront expenses in installments.
Depending on how much you’re borrowing and how creditworthy your business is, your payback period will vary. The repayment period may be as short as 36 months or as long as over 10 years.
Conclusion
Your business may benefit from equipment financing in a variety of ways, but it can be stressful if the financing terms are not flexible and the equipment you require is prone to becoming obsolete. To avoid this situation, equipment leasing can be the right choice.
Since both equipment leasing and financing in Abbotsford may be the best choice for your business, depending on your financial situation and needs. If you are looking to lease or buy heavy equipment, rely on none other than Sandhu & Sran Leasing and Financing. For past many years, we have successfully helped small and mid-sized businesses in achieving their inventory expansion goals without burning a hole in the pocket. Contact us to discuss your equipment financing and leasing needs to get started.