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Wednesday, October 13, 2010

Equipment Leasing for Heavy Machinery

As the American Recovery and Reinvestment Act of 2009 continues to dole out funds in hopes of bolstering the economy, additional infrastructure jobs are up for grabs. Those in industries operating heavy equipment should take note that these opportunities are creating a necessity for additional or upgraded equipment. However, resist the urge to run headlong into a purchase without understanding the options on the table.

There are two main options when acquiring new heavy equipment: leasing or purchasing. To determine which option will maximize benefits while minimizing risk, you must evaluate your business's current equipment needs in conjunction with its present financial situation. However, don't omit your predictions for the future state of these areas when assessing the pros and cons of purchasing or buying equipment. Draft a business overview that includes:

  • The ways in which your business will be more competitive with additional or upgraded equipment.

  • The state of your capital: the funds you have available now and in the future.

  • Your current and potential equipment needs.

  • Changing technologies: how often does your equipment need to be upgraded to ensure your business remains viable?

Many leasing companies offer free consulting services that will help you answer these important leasing questions and help you select the customized equipment leasing program that is most advantageous for your needs. Generally, businesses that require up-to-date equipment so as to stay competitive will lean toward leasing because of the options to upgrade. In addition, businesses that may have the cash flow to fund heavy equipment upfront will opt for a leasing program in hopes of conserving their working capital and credit lines while benefiting significant tax savings.

When basing your decision to lease or purchase your equipment, consider the cost per month rather than deciding based upon the loan interest rate or lease rate. By relying on a simple rate-to-rate comparison, you're not taking into consideration that lease pricing is configured based on the precept that the piece of equipment has residual value following the term of the lease.

Because of the numerous benefits of equipment leasing versus buying, 8 out of 10 business owners utilize leasing options when acquiring heavy machinery including:

  • Construction equipment: bulldozers, backhoes, excavators, surveying equipment and trucks or tractors.

  • Warehousing equipment: forklifts, manual lifts, power movers and conveyers.

  • Industrial and manufacturing equipment: grinders, lathes, material handling machines and welding and molding equipment.

  • office equipment: copiers, furniture, labeling and postage machines and embossers.

Additional Information can be found here:


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posted by Tiger Leasing @ 3:58 PM


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