Lease or buy?

June 11, 2015 -  By

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Pros + Cons

Leasing and buying are the primary ways landscape contractors add to their fleets, but don’t forget about renting. Here are some pros and cons for each option.

Buying
+Pro: Residual or resale value. You can trade it in down the road to offset the cost of the next equipment you buy.
+Pro: Asset depreciation reduces your tax obligation.
+Pro: Financing is an option, but cash purchases eliminate finance charges and interest costs.

-Con: Payments are generally high because you’re paying for the full value of the equipment.

Leasing
+Pro: Payments are generally lower because you’re only paying for the use and depreciation of the machine. Some leases allow for skipped payments during slow months.
+Pro: No down payments, so it’s easier to replace aging equipment with minimal capital outlay.
+Pro: Helps structure a schedule for replacing equipment before maintenance costs become too expensive.

-Con: Lease agreements can be complex, heavy on fees and unbreakable, which increases the risk for companies.

Renting
+Pro: It provides access to equipment you need occasionally.
+Pro: It allows you to try a machine before you buy it.
+Pro: Users typically aren’t responsible for maintenance costs.

-Con: Daily or weekly rental costs may be high. Remember to figure them into your job costs.

Download a PDF of the checklist here.

Source: biztree.com; empire-cat.com; Small Business Administration; Roy Brookhart, Caterpillar

This article is tagged with , , , , , , and posted in 0615, Design/Build+Installation

About the Author:

Marisa Palmieri is an experienced Green Industry editor who's won numerous awards for her coverage of the landscape and golf course markets from the Turf & Ornamental Communicators Association (TOCA), the Press Club of Cleveland and the American Society of Business Publication Editors (ASBPE). In 2007, ASBPE named her a Young Leader. She graduated with a Bachelor of Science in Journalism, cum laude, from Ohio University’s Scripps School of Journalism.

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