Regardless of the tool needed for the job, construction firms must have equipment that is:
Combined with heavy machinery being expensive to buy and demanding significant amounts of capital, companies have now turned to leasing construction equipment. This move allows starting up construction firms to get the machinery they need at an affordable price.
Any piece of equipment or machinery can be financed or leased, but each firm is tasked with making the big decision of what to do. Each method has pros and cons, and there are several factors that determine whether to lease or to finance.
When leasing construction equipment, the lessor has full access to using and operating the machinery without outright owning it. After the lease is over, there are four options for the firm to choose from:
The flexibility that leasing provides is the driving factor why many construction companies choose this option over financing.
The unique benefits that this business decision brings include:
On the reverse, financing is having the equipment on loan. The loans offered are used to buy equipment, companies then must pay periodic payments over a fixed term. Once paid in full, companies receive full ownership and title of the equipment.
Equipment loans can also impose liens on additional assets or require personal guarantee before the equipment is received.
Compared to leasing, financing offers slightly different advantages for businesses:
Understanding the differences between equipment financing and leasing can allow businesses to be more competitive and ensure they’re getting the most out of the equipment. While it can be confusing, speaking to industry experts can help outline the advantages of each option clearly.
Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.