Tips to Save Money on Construction Equipment Leasing – We’ve all heard it takes money to make money – that’s not always the case. So if you’re worried about taking on a new contract because you don’t have all of the equipment you need, don’t forget that heavy equipment financing is a thing.
Financing or leasing your equipment can be a great option if you don’t have the cash flow or credit to buy what you need upfront. Leasing equipment can work for most businesses regardless of how they operate.
Before signing any agreement, you need to know a few good tips about different leases and the benefits of heavy equipment financing. Also, get proper maintenance of the forklift from KLJ Consulting.
1. How a Fair Market Value Lease Works
A Fair Market Value Lease works almost exactly as it sounds. After entering this sort of lease, you will have the option to buy the equipment for the market value when the term is up. You can also decide to extend the lease or let it end. This tip to save money on construction equipment leasing is one that is often overlooked
If you choose to purchase it, the price is based on the value of the equipment minus what you have already spent by leasing it. This option is similar to financing; only it’s typically easier to get into a lease.
This option is usually the most flexible and has the lowest monthly cost.
2. Look into Dollar Buyout Leases
This type of lease is best for bigger purchases that aren’t going to depreciate quickly. When this lease term ends, you will have the option to buy the equipment for only one dollar.
We know that sounds like a steal, but the monthly payments will be high throughout the term of the lease. You will be effectively paying the total value of the equipment during that time frame, which is why you have the option to buy it for a dollar at the end.
If you enter into a contract like this, you need to make sure the equipment’s value will stay relatively the same over time.
3. Wrapping a Lease
When you have a wrapping lease, you can add more equipment to it as you go. This type of lease is beneficial if you are still a growing company and unsure exactly what you will need to complete your jobs.
It’s also great if you want the option to start to scale up your business quickly.
When you add in a new piece of equipment, the payments will adjust to include everything you have leased—keeping everything in one easy payment instead of keeping up with multiple.
A sale-leaseback is when you sell your equipment to someone who turns around and leases it right back to you. This transaction gives you cash to spend on leasing or financing other equipment.
An Equipment Sale-Leaseback is a good way to infuse any business with a little extra cash and give you a boost. One of the drawbacks to this type of lease is that it typically has a higher payment and a shorter contract.
5. Heavy Equipment Financing Gives Flexibility
One of the biggest positives to leasing or financing the equipment you need is finding something that will help specifically with your situation.
There are so many options. Whether you need a better cash flow or more equipment to complete a job, you should have no problem finding it. You can take your finances into your own hands.
6. Keep Your Capital
Running a business can be difficult; you work hard to get your contracts and get the jobs done. However, the last thing you want to do is spend that capital in risky ways.
Buying heavy equipment can be a significant financial investment, and for many businesses spending that money in one swoop can be nerve-wracking. That’s where financing or leasing can be a huge help.
Leasing can take the uncertainty out of the picture. You will know exactly how much is going out every month, and you can keep some of your capital in case an emergency happens.
As you start to gain capital, you can begin to pay off your financing faster.
7. Stay With the Newest Equipment
Leasing will allow you to keep up with the newest technology. Almost every year, there are recent advancements that can help make your job easier.
When you are leasing, you can have the opportunity to get new equipment at the end of your lease terms. This approach can help keep your company on the cutting edge of your industry. The odds are that without the lease, you would have the funds to make that investment year after year.
8. Reduce Your Risk
When you make a large equipment purchase, there is always some risk. For example, if something happens, you may no longer have the budget to adjust for it. Such as if you end up needing more equipment or if it goes down and needs repairs.
If you’re just leasing or financing — you should have the finances to cover it. You are taking the risk out of having the equipment.
9. It’s a Tax Write Off
Most businesses know that they can write off equipment that they own. However, not a lot of people realize that you can still write off leased or financed equipment.
So, not only are you saving money by leasing the equipment, but you can also save on your taxes at the end of the year.
10. Easy Returns
Everything has a day when it’s time to retire. Whether it’s because it’s time to get new equipment or it’s broken and needs to be discarded.
When the equipment is yours flat out, it’s your job to figure out what to do with it. You’ll have to find someone to buy it or haul it away; that might be difficult.