Do you pay interest on an equipment lease?

Ask any business owner and they’ll tell you: there are hundreds, if not thousands, of expenses involved in running a business, always popping up at the least-convenient moment for you to deal with. The cost of renting office or retail space, employee salaries and bonuses, advertising, marketing… and equipment.

Providing equipment is incredibly important for virtually any business– it really is the “bread and butter” of the whole operation, allowing you and your employees to provide high-quality, unique products and services. Good equipment also streamlines productivity and efficiency, ultimately increasing revenue. It’s important!

However, purchasing equipment outright can be prohibitively expensive. Enough computers, monitors, printers, company vehicles, etc. for a whole staff can add up to be a pretty big expense, one that a small business owner might not be able to handle. So what are you supposed to do?

Purchasing Office Equipment

Unless you have quite a bit of capital already set aside to get your business started, you probably won’t be able to purchase all of the equipment you need outright. But if you do, that equipment is yours– no monthly payments!

Unfortunately, there are a couple of major drawbacks to purchasing equipment. First, unless you have the capital to purchase outright, you will most likely have to take out a loan. This loan can come with some pretty hefty monthly payments, and will also affect your credit report. You’ll want to pay close attention to your business credit, because poor credit will affect your ability to take out loans in the future, which could cause major problems in operations.

Purchasing equipment means that you alone are responsible for it now, which means you have to handle maintenance and troubleshooting, and at some point in the near future when it becomes obsolete, you have to undergo the whole purchasing process again. This time, you’ll have a lot of outdated equipment to sell, too.

Leasing Office Equipment

When you lease equipment, you are essentially borrowing it for a predetermined amount of time. It doesn’t belong to you, so when the lease ends, you return the equipment to the lender and are no longer responsible for it. 

This means that you can use the equipment while it’s new and efficient, and when improved models are inevitably released and yours become obsolete, you can simply return it and lease the very latest technology. No need to sell the outdated equipment– it’s not your problem!

Using the newest equipment means that your business will run more smoothly, your employees’ productivity will increase, and perhaps most importantly of all: you’ll be enjoying the current industry standard of information security. Your documents and communications will be kept safe– which means protection for your finances. Sounds great, right?

But do you pay interest on leased equipment?

The short answer is yes: you do pay interest on leased office equipment. It’s important to understand the context of that interest, though.

Leasing equipment is different from taking out a loan. A major benefit of leasing is that you don’t have to take out a loan to do it, which means that it does not show up on your credit report. If your goal is to build business credit and optimize your future chances of being approved for a loan, leasing is definitely the way to go.

During the period of your lease, you will make monthly payments. It’s important to note that those payments are often less expensive than loan repayments. Additionally, you can often deduct the cost of leasing equipment as a business expense!

Leasing office equipment is a great way to provide the latest technology for your company so you and your employees can do your best work without having to deal with old, outdated equipment slowing you down. It’s also much less of a financial burden than purchasing equipment outright, and it doesn’t impact your credit score.

If you’re searching for office equipment for lease in Little Rock, Central Business Equipment is the place to go. Reach out today with your specific equipment needs and we’ll work with you to create a solution that maximizes your productivity and, ultimately, your profits.