The main advantages of lease-to-own are low monthly payments, up to 100% of the equipment cost covered for qualified businesses, flexible terms, more cash kept available, a way to own your equipment, and possible tax benefits. Beacon Funding’s lease-to-own lets you use equipment now and pay for it over time.
Here are eight advantages to consider lease-to-own before choosing how to acquire your next piece of equipment.
In this article…
- Buyout Options Let You Take Ownership at the End of the Term
- Listen to The Podcast Episode
- Lease-to-Own Spreads Equipment Cost into Budget-Friendly Monthly Payments
- Lease-to-Own Payments May Qualify for Tax Deductions
- Lease-to-Own Offer $0 Down Payment Options for Qualified Businesses
- Lease-to-Own Lets You Customize Your Term and Payment Plan
- Lease-to-Own Can Keep Cash Available for Payroll, Inventory, and Repairs
- Lease-to-Own May Help Mitigate Risk by Letting Equipment Earn Towards Its Payment
- Equipment That Outlasts Your Lease May Support Long-Term Profitability
- Frequently Asked Questions
1) Buyout Options Let You Take Ownership at the End of the Term
Ownership is the defining feature of Beacon Funding’s lease-to-own program. You use the equipment from day one, make payments over the agreed term, and exercise your purchase option to take ownership when the term ends.
Beacon’s lease-to-own program builds your plan around the purchase option you prefer. Purchase options include:
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$1 Buyout
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A Percentage of the Purchase Price
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Pay $1 for your equipment at the conclusion of the lease term.
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Pay 10% - 20% of the original purchase price for your piece of equipment.
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Your purchase option also shapes your payment. A $1 buyout may come with a higher monthly payment and a minimal final payment, while a percentage buyout may lower the monthly payment and leave a larger final payment. The right balance depends on your cash flow and how you plan to use the equipment.
About 90% of Beacon Funding’s lessees use their purchase option.
If you’re considering leasing equipment and ownership is your goal, compare your purchase options before choosing a plan. A lease-to-own expert at Beacon Funding can help you build the plan around the option that fits your business.
Listen to The Podcast Episode
Prefer to listen? Press play on the episode below for an overview of Beacon Funding’s lease-to-own program, then keep reading for the rest of the benefits..
2) Lease-to-Own Spreads Equipment Cost into Budget-Friendly Monthly Payments
Paying the full price of equipment in one payment can strain a budget. Lease-to-own spreads that price over the term of your agreement, so the cost is spread out over low monthly payments instead of one large purchase.
Your monthly payment may depend on factors such as:
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Equipment price
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Term length
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Equipment type
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Purchase option
CALCULATE YOUR MONTHLY PAYMENT
Knowing your breakeven point, the amount of work the equipment must bring in cover its monthly payment, helps you judge whether it can pay for itself. A monthly payment is easier to forecast than one large purchase. Once you know that payment, you can estimate how many jobs you need to book or orders you need to fill to break even on it. Beacon Funding’s equipment financing calculator can also calculate your breakeven point.
3) Lease-to-Own Payments May Qualify for Tax Deductions
Lease-to-own can offer tax benefits. Your business may be able to write off the lease payment each tax year, but the tax treatment depends on the type of agreement and your business situation.
Beacon Funding offers both capital and operating leases. Capital leases may allow depreciation write-offs, while operating leases may qualify as rental expenses.
CALCULATE YOUR POTENTIAL SECTION 179 DEDUCTION
Because tax rules can vary, be sure to talk with your tax professional before acquiring equipment.
4) Lease-to-Own Offer $0 Down Payment Options for Qualified Businesses
Through Beacon Funding’s lease-to-own program, qualified businesses may be able to get equipment with $0 down payment options. That means you may not need to make a large upfront payment to get started.
Instead of waiting to save for a large down payment, you may be able to start using the equipment while making your scheduled lease payments.
5) Lease-to-Own Lets You Customize Your Term and Payment Plan
Not every business has the same equipment needs or budget. Lease-to-own can give you more ways to structure the cost around your business.
A tow operator, an embroidery shop, and a landscaping crew run on different equipment, different busy seasons, and different budgets. A flexible plan lets you match the lease to how your business actually operates.
Depending on approval, you may have options for:
- Term lengths from 36 to 84 months, depending on the lease amount
- New or used equipment
- A custom plan around your budget and cash flow
Beacon’s lease-to-own program lets you build a custom plan around your preferred term length.
Term length is the main lever. A longer term may lower each payment, while a shorter term may help you finish paying sooner. The right balance depends on your margins, your cash flow, and how long you expect to use the equipment.
6) Lease-to-Own Can Keep Cash Available for Payroll, Inventory, and Repairs
Paying for equipment in full can use a large amount of your available cash at once.
Spreading cost over time can leave more money available for other business expenses, such as:
| Payroll |
Inventory |
Repairs |
| Marketing |
Insurance |
Hiring |
Beacon Funding also lists conserving cash as a benefit of its lease-to-own program.
7) Lease-to-Own May Help Mitigate Risk by Letting Equipment Earn Towards Its Payment
A large equipment purchase puts money at risk before the equipment has earned anything. With lease-to-own, the cost is spread over the term, so the equipment can start working for your business while you pay for it.
If the equipment brings in additional revenue, such as new jobs, larger orders, or added capacity, that income may help cover the monthly payment. The more directly the equipment connects to revenue, the easier it is to see how it may support its own payment.
For example: A tow operator with an added truck may be able to respond to more calls, and an embroidery shop with an added machine may be able to take on larger orders. Whether the added revenue covers the payment depends on demand, pricing, and operating costs.
Revenue is never certain, so it helps to choose a payment that still makes sense if business slows down.
Before starting a lease-to-own program, ask yourself:
- How will the equipment help my business?
- What will the monthly payment be?
- How long will I use it?
- What happens if business slows down?
- What will I pay if I choose to own it?
Looking at these questions can help you decide whether the equipment and payment plan make sense for your business.
8) Equipment That Outlasts Your Lease May Support Long-Term Profitability
Many types of commercial equipment can stay in service longer than a lease term. When that’s the case, the equipment may keep earning revenue after your final payment.
Once the term ends and if you’ve taken ownership through a purchase option, the monthly payment goes away while the equipment may continue to work for your business.
For example: A tow truck or an embroidery machine may stay in service for years after the last lease payment, depending on how it is used and maintained.
Equipment also needs maintenance and eventually replacement, so long-term profitability depends on how well you care for it, how steadily you use it, and what it costs to operate. Matching your term to how long you expect to use the equipment can help.
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Frequently Asked Questions
1. What are the main advantages of lease-to-own?
Beacon Funding’s lease-to-own offers a path to equipment ownership, low monthly payments, $0 down payment options for qualified businesses, more conserved cash, and possible tax deductions.
2. Is lease-to-own available for used equipment?
Yes. Beacon Funding offers lease-to-own options for both new and used equipment. The equipment’s condition and your lease approval can affect the available terms.
3. Do I own equipment at the end of a lease-to-own agreement?
You can. Beacon Funding’s lease-to-own plans are designed to help lessee’s take ownership of the equipment at the end of the term by offering purchase options, ranging from $1 to 10% - 20% of the equipment’s original purchase price. About 90% of its lessees use their purchase option.
4. Are lease-to-own payments tax deductible?
They may be. Your business may be able to write off the lease payment each tax year, but tax treatment depends on the agreement and your business situation, so speak with your tax professional before claiming a deduction.