There are a ton of opinions out there about whether you should buy or lease your equipment. Experts everywhere are straining their voices to be heard. I’m here to tell them, “don’t waste your breath.” You’ve already made the decision that buying with cash isn’t in the cards for you and your small business. Congratulations! That decision is out of the way, but now another one looms.
Once you’ve made the choice to lease your company’s equipment, the next question becomes whether you’re going to lease new or used equipment. Should you lease a brand new boom truck that has a more compact knuckleboom superstructure, or do you go with old reliable at a lower price? If you’re a new business, this is an especially tough choice to make.
Fresh off the assembly line
Your instinct is probably to go for the newest model available, and you may be right. Recently released equipment has some excellent benefits, sometimes even ones you don’t expect. If you’re looking to lease your screen printing machine, let’s see why a new model is a solid choice.
"If you treat it right, your equipment could last you a generation."
New machines, more often than their older counterparts, will be available for either buying or leasing. The purchasing price is going to be pretty steep, but that makes buying new an excellent decision after you have an established line of capital coming in. If you choose to buyout at the end of your lease, a newer model will still retain much of the same value it had just a few years before (when your lease began). We tend to recommend leasing new equipment before buying, though, as this will give you familiarity with the machine. Imagine buying a bucket truck that is only a few months old and discovering soon after that those models don’t perform as well as you expected. Leasing before buying is the smartest option.
Another thing to consider is that newer machines may be untested in the field, but the risk in leasing one is negligible if it means having an edge on competitors. A new rig is more likely to have maintenance support and warranty coverage. Plus, equipment that was built with the latest technology in mind isn’t just useful in its own right, that’s a marketable asset. Advertise that you use the most recently developed machines in the trade, and you’ll see competitors scrambling to catch up.
Want to see it affect your ROI? Don’t be afraid to push that rig to the limit. So long as you keep it well maintained and regularly serviced, you can increase your load while decreasing turnaround time. Get the most out of this vehicle. If you treat it right, your equipment could last you a generation, and new equipment is the best place to start.
Gently used equipment doesn’t just save you money
Of course, that’s one of the main reasons businesses tend to rent used. You can safely go for an embroidery machine with some mileage on it without sacrificing quality. We recommend to find a lender that only leases equipment that meets the highest standards, and that goes double for used. The older a well-performing machine is, the more dependable it can be. A trustworthy vehicle can be your saving grace when a newer machine is revealed to have an overlooked defect.
Older, long-lasting equipment tends to have more reasonable terms. A lender may want to move newer equipment from rental to rental more quickly, which raises lease rates while shortening time. They’re looking to hold onto that selling point as long as they can. A more reasonable lender would look to give you a fair lease on a schedule that matches your needs.
That brings up another issue: What kind of lender will have the best service and equipment knowledge? Any firm that focuses on your industry will know more about the product. They’ll have a better understanding of competitive rates, the best models to work with, and which ones age more gracefully. If your leasing financier is experienced, they’ll also probably have references from vendors they work with on a routine basis. This can be an advantage for the small business owner who doesn’t want to spread out his or her equipment acquisitions.
Even if you want to get your hands on a new tow truck, having the right amount in the budget can be tricky. Why not lease used first? Getting started in your industry is never easy. Why make it harder for yourself? Don’t get caught up in trying to beat out the competition. Instead, take this time to establish your name, raise capital, and build a customer base. Leasing used gives you a great impression of what to look for in a new model (if and when the time comes for that).
Do you really have to choose?
That’s the secret to the whole process, and businesses usually don’t discover it until they’ve been at it for years. You don’t need to pick just one or the other. For some companies, leasing used is best at first, because it gives them time to set up shop. For others, especially those with some more funds allocated, they won’t hand over cash for a machine unless the paint is still wet.
It might be you need a heavy duty, Big Bertha style rig that has stood the test of time. Equipment like that is guaranteed to remain invaluable for the length of its lease. However, a brand new embroidery machine, with needles that have yet to be replaced, is perfect for those more delicate tasks. Once the gears are wearing a bit, it will be time to rent again anyway.
Deciding on new or used equipment is a case-by-case situation. More than that, it’s entirely dependent on the type of company you have. Your business is unique, and your needs are specific to the jobs you have to get done. That’s why it’s helpful to have an arsenal of equipment from various ages and a number of different specialties.
Don’t fall into the trap of new vs. used
Some equipment financing firms will argue that you need to make the choice anyway. The truth is, there’s no decision to be made. A firm that prefers financing new stuff isn’t a bad guy, but it’s best to go with a lender who knows the value of machines at any age. Financiers want to help their customers do the research, and we encourage you to make a choice only after you’ve found the right equipment for the job.
Give yourself the appropriate amount of time to go over these questions with your lender. Evaluate what they have in store, and compare it with what you know is ideal for your trade. Don’t jump into the first tow truck you see, instead give them all a good look over. More than anything, when looking to lease new or used equipment, get to know your own business first. Then the answers will come to you naturally.