Buy or lease?
Factors to consider before acquiring your next equipment
Should you buy or lease?
An improving economy typically brings a renewed interest in new compact equipment. After answering the question of which make and model, the next decision is usually whether to buy, lease or rent. With so many choices available, the decision can be perplexing at times.
Its important to understand from the beginning that there is no right or wrong answer. Thats because everyones situation is different. Factors to consider include the cost of equipment, your current and future financial position, tax consequences, how long you expect to use the equipment and its potential resale value if you decide to purchase instead of lease.
Here is how some of the different methods of financing compare:
Advantages of buying
- Equity. Owning equipment helps build equity in a company.
- Tax incentives. The IRS may allow you to deduct a substantial portion of the purchase price.
- Depreciation. Most equipment qualifies for a depreciation deduction, as does interest on borrowed funds.
Purchasing includes a higher initial expense and owning equipment that is eventually outdated.
Advantages of leasing
- Less initial expense and a down payment is usually not required.
- Improved cash flow. Capital that would otherwise be used for buying new equipment is available for other needs.
- A payment plan can usually be tailored to match periods of peak income.
- Reduced risk. There is no need to be concerned with large, unexpected maintenance expenses.
- Flexible terms. A lease, for example, can be written to match the length of a project.
- Tax deductions. Payments are usually considered a business expense.
- Current equipment. At the end of the lease, you can upgrade to the newest model and technology.
PowerLease program stands out
Bobcat dealers have a variety of finance programs available to fit specific customer needs. One of these choices the surprise-free, clear and simple PowerLeaseSM program is a popular option. It features many of the typical leasing advantages cited above, along with others that are unique to this Bobcat program:
- No down payment.
- Unlimited hours for the vast majority of applications (there are a few exceptions).
- No residual or balloon payment and a purchase option stated upfront.
- Structured payments to match seasonal revenues.
- Lowest monthly payment of any option, including rental and 0 percent interest.
- Lower operating costs.
- Tax and accounting benefits.
- Open credit lines.
- Flexibility to buy out the lease at a predetermined amount or turn in the equipment and walk away.
- Access to new equipment with upgraded technology.
- Reduced potential downtime.
In comparing payments for all Bobcatฎ products and for all terms, the PowerLease program offers a significantly lower payment option nearly half the monthly payment compared to 0 percent financing for 36 months.
In some cases, a smaller loader can be leased for about $10 a day. Compare that to the productivity and cost of a worker with a shovel and wheelbarrow.
When all of the numbers for financing compact equipment are evaluated, the PowerLease program is likely to be the most effective way to operate new Bobcat products.
Leasing new equipment for seasonal work is financial no-brainer
Mark Johnson (left) and Steve Orange
Mark Johnson and business partner Steve Oranges snow removal business is growing as fast as the snow is falling, and when you live in Whistler, British Columbia, thats mighty fast.
Since starting the company Stark Contracting & Management in 2011, Johnson and Orange have seen many of their snow removal contracts quintuple. That rapid expansion has necessitated purchasing more equipment quickly. Thanks to an industry-leading lease program, adding top-of-the-line Bobcat loaders and snowblowers was easy.
The Bobcat PowerLease program has been the perfect fit for us, Johnson says. We set up our payments to match our wintertime income, which is generated over a five-month period November through March. We leased a pair of A770 all-wheel steer loaders equipped with 84-inch SBX240 high-flow snowblowers. When our local dealer Westerra Equipment brought this option to my attention, I was surprised at what a good deal it was. I had never heard about this type of lease, but once I got the details it was really a no-brainer.