How Equipment Lease Buybacks Work
Equipment leasing can make a big difference in your company’s bottom line. If you have a lot of money tied up in construction equipment, computers or transportation vehicles, you may be able to make use of it in other areas of your business. Find out what the benefits of lease buybacks are and how they work.
What Can a Lease Buyback Do for Your Company?
There are a variety of benefits when your business decides to lease purchased equipment. For example, the equipment is no longer considered a fixed asset. Instead, it’s considered a business expense which can improve your ratio of assets to liabilities, something that shows you can handle short-range debt.
Because your payments have changed to business expenses, you may be able to write them off on your taxes. This can save you more money than tallying yearly depreciation and that can add up significantly over time.
If you need quick money to expand your business, a loan might be out of the question. Whether it’s too expensive to pay back or takes too long, traditional loans have their setbacks. However, leasing your equipment for cash can offer you more money for expansion, inventory or renting a new space. You can also use that money to buy or lease new equipment without taking out an additional loan.
Equipment leasing means that the leasing company is on the hook for repairs and general maintenance as well. While lease payments will increase a bit due to these services being factored in, not having to pay a major repair bill can still save you a good bit of money.
If you participate in a lease buyback, you will often have the option to upgrade your equipment at the end of the term. Leasing companies are likely to offer you new, up-to-date gear to replace older items. This means you could get a good deal on new construction equipment, vehicles or computers that you might not have had access to otherwise.
What Does a Lease Buyback Entail?
So, you’ve read the benefits. How do you achieve them? A lease buyback means that you sell your equipment to a leasing company for full value. You then lease it back from them at a lower monthly payment. This gives you money up front for a variety of other projects and puts the strain of maintenance and repair on someone else’s shoulders. Simple, right?
If you’re looking for a quick influx of money for your business without taking out a loan, you should consider equipment leasing buybacks. Use the money you have tied up in equipment to get new vehicles, move your business or simply expand your services.