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Lease or buy?

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LM_pc_design-build

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

Marisa Palmieri

Marisa Palmieri

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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