Financing your next equipment acquisition means carefully considering every option, from multi-asset loans that consolidate debt to equipment leasing agreements that put machines in your hand without a down payment. While it’s true that many leases have an origination fee, it is not usually the same as a down payment requirement for a bank loan, and sometimes that fee can even be folded into the monthly payment to avoid cash due at signing. Beyond that detail, there are a lot of reasons why a lease is the best choice for your next new machine.

1. Delivery and Disposal Is Handled for You

Purchasing equipment means not only covering the cost of financing and the down payment, but also logistical costs like the disposal of your old machines and the delivery of the new ones. When you lease, delivery and pickup are the responsibility of the owner. That means you do not have to pay for the delivery and after the lease term is over, the leasing company will retrieve the equipment, so you also do not pay for disposal. This makes upgrading easy because you can simply lease the newer machine you want and let the leasing company handle the rest.

2. Equipment Leasing Is a Cost of Doing Business

Your business costs are deducted from gross revenue to determine your company’s actual income, but loan debt is not typically classified as a business cost for this purpose. It is instead a payment on a debt, not a direct cost of producing goods and services. By contrast, a leasing or rental agreement is considered a cost of goods and services. The difference is in whether you made the investment in an asset, and it can be a big difference when it comes to your tax obligations.

3. Leasing Keeps Your Debt To Income Ratio Low

If you choose equipment leasing, your credit report will show less debt than if you finance its value with a loan. As a result, other loan and credit line approvals may be easier, depending on your company’s existing debt load and credit score. This can be a huge benefit when you are trying to qualify for a major piece of financing like a commercial mortgage. By avoiding additional debt while still acquiring the equipment, you also provide your business with the opportunity to expand so that the mortgage will be even easier to afford after approval, which is a good risk mitigation tool for your business.