To lease, or not to lease? That is the question pondered by many who are looking to start a small business using their trade qualification. What are the benefits and drawbacks when leasing the vehicles and equipment you need, as opposed to buying outright?
We’ve broken down both options so you can make an informed decision about leasing the trucks and equipment used in running your business.
Pro’s of leasing trucks and equipment
- Cash flow remains undisturbed. Because there is a lower capital expense upfront, and monthly payments are predictable and not tied up in a depreciating asset, you can manage your cash flow more easily.
- Lease payments can be claimed as a tax-deduction.
- You can stay up-to-date with the latest advancements in vehicles and equipment. If you need to update to stay competitive or change to improve efficiencies, you have the flexibility to do so.
- If a piece of equipment or vehicle breaks or has issues due to normal wear and tear, the leasing company is usually in charge of fixing the equipment, saving you maintenance and repair costs.
Con’s of leasing trucks and equipment
- It’s likely that you will end up paying more over time than if you had bought the equipment upfront.
- You don’t own the equipment. So, you have no option to sell the equipment when you’re done with it.
- The length of the lease might be longer than you want. So, if the contract is strict, you might be stuck paying for a piece of equipment or an unused vehicle that you no longer need.
When it comes time for you to make a decision about leasing or buying a vehicle or equipment for you small trade business it will be important to weigh the primary leasing benefit of improved cash flow against the cost of not having total ownership of the asset.
If your capital is limited as a small trade business, then leasing equipment can be a good option. However, if you’re an established trade company or your equipment has a long usable life (like most heavy power tools), then purchasing your equipment is a valid option too.
Whatever you choose it’s important to protect one of your business’s most precious assets. Truck Assist’s Drive Pack Truck Insurance package is a well thought out solution for small businesses who are seeking to protect their company vehicle. Get a quote online to see how we can have your back on the road.
This blog is a guide only and does not contain a definitive list of regulatory requirements which you must meet as a business owner. Businesses are required to comply with all laws, regulations and codes of practice by identifying their risks, and develop and implement control measures tailored to their circumstances, and you must seek independent advice to assess your circumstances.