Should your business lease or buy Air Compressor? The answer depends on your situation. Leasing can be a good option for business owners who have limited capital or who need Air Compressor that must be upgraded every few years, while purchasing a Compressor can be a better option for established businesses or for Air Compressor that has a long usable life.
Leasing Air Compressor
Leasing an Air Compressor and tools preserves capital and provides flexibility but may cost you more in the long run.
Advantages of Leasing Air Compressor
Less initial expense. The primary advantage of leasing is that it allows you to acquire assets with minimal initial expenditures. Because Air Compressor leases may require a 15%-30% down payment, you can obtain the goods you need without significantly affecting your cash flow.
Tax-deductible. Lease payments can usually be deducted as business expenses on your tax return, reducing the net cost of your lease.
Flexible terms. Leases are usually easier to obtain and have more flexible terms than loans for buying Air Compressor. This can be a significant advantage if you have bad credit or need to negotiate a longer payment plan to lower your costs.
Easier to Upgrade Air Compressor. Leasing allows businesses to address the problem of obsolescence in this era of innovation and automation. a lease passes the burden of obsolescence onto the lessor. You are free to lease new, higher-end Air Compressor after your lease expires.
Disadvantages of Leasing
Higher overall cost Leasing a sCompressor is almost always more expensive than purchasing it. For example, a 3-year lease on air compressor worth $8,000, at a standard rate of $80/month per $1,000, will cost you a total of $9,760. If you had bought it outright, you would have paid only $8,000.
You don’t own it. You don’t build equity in the Air Compressor. Unless the Air Compressor has become obsolete by the end of the lease, this lack of ownership is a significant disadvantage.
Obligation to pay for entire lease term. You are obligated to make payments for the entire lease period even if you stop using the Air Compressor. Some leases give you the option to cancel the lease if your business changes direction and the Air Compressor you leased is no longer necessary, but large early termination fees always apply.
Buying Air Compressor
Ownership and tax breaks make buying business Air Compressor appealing, but high initial costs mean this option isn’t for everyone.
Advantages of Buying Air Compressor
Ownership. The most obvious advantage of buying an Air Compressor is that you gain ownership of it. This is especially true when you know that it has a long useful life and is not likely to become technologically outdated in the near future.
Disadvantages of Buying Air Compressor
Higher initial expense. For some people, purchasing Air Compressor may not be an option because the initial cash outlay is too high. Even if you plan to borrow the money and make monthly payments, most banks require a down payment of around 20%. Borrowing money may also tie up lines of credit, and lenders may place restrictions on your future financial operations to ensure that you are able to repay your loan.
Getting stuck with old Compressor. Although ownership is perhaps the biggest advantage to buying Air Compressor, it can also be a disadvantage. If you purchase high-tech Air Compressor, you run the risk that the it may become technologically obsolete, and you may be forced to reinvest in new Air Compressor long before you had planned to. Certain Compressor has very little resale value.
Should You Buy or Lease?
When deciding whether to buy or lease an Air Compressor, try to figure out the approximate net cost of Compressed Air Equipment. Be sure to factor in tax breaks and resale value when making this calculation. After determining which option is more cost-effective, consider other intangibles such as the possibility that it may become obsolete (if you are considering purchasing) or that your need for the compressor will expire before the lease does (if you are considering leasing).
