Your company needs certain equipment to operate efficiently and function in a competitive marketplace. From heavy equipment and machinery to office equipment and technology, equipment rental contracts and leases both allow companies to fulfill their short-term and long-term equipment needs.
But which option is right for your company? To find out, you will need to answer the question, “What’s the difference between renting and leasing?” as well as evaluate your company’s specific equipment needs, compare rates and terms from multiple financing and leasing companies, and consider the pros and cons of short-term rental contracts and long-term leases.
Here is your guide to comparing rental vs. lease equipment in Chicago, IL, to find the option that best meets your business’s needs.
Understanding Equipment Renting
Let’s take a closer look at renting equipment. Understanding the potential benefits, drawbacks, and goals of this model will help you determine if it’s the right choice for your business.
- What Is Equipment Renting? Renting office or business equipment is ideal for short-term needs or completing a project. Rental terms are usually daily or monthly, which means that the payments may be more expensive over time when compared to a lease. However, you will get access to maintenance and repairs without investing in ownership.
- The Case for Renting: Flexibility for Short-Term Needs – Renting equipment offers greater flexibility. Should your business’s needs change or evolve throughout the term, you can adjust your rental agreement or negotiate with your equipment rental company. If you aren’t sure how long you will need the equipment, renting is the best option.
- Key Benefits of Renting – Renting does not require a large initial investment in the cost of the equipment. It allows you to retain cash reserves and better manage your monthly budget. You can get the most modern, innovative equipment or technology you need to complete a short-term project, set up a new office or business location, meet the needs of a specific client, or begin expanding your business. You can also use a rental to determine what equipment is best suited to your company’s productivity and efficiency needs, and upgrade or try a new model at the end of the term. Plus, maintenance and repairs are typically included in the terms.
- Potential Drawbacks of Renting – Renting has a higher long-term cost when compared to leasing. If you think you might need equipment for longer than six months, you might consider a lease. Plus, because you don’t own the equipment, no equity is gained.
Exploring Equipment Leasing
Now let’s look at equipment leasing. Being aware of the ins and outs of the leasing process will help you better understand the pros and cons:
- What Is Equipment Leasing? Equipment leasing is a long-term financial agreement between you and a lender or leasing company. It often includes purchase options so that at the end of the lease term, you can either purchase the equipment at fair market value, return it for an upgraded model, or return it and walk away from any further obligation.
- The Strategic Advantage of Leasing: A Long-Term Solution – Leasing is best for long-term equipment needs or ongoing needs. You can use it to ensure predictable monthly equipment costs, take advantage of tax benefits, and build equity, all while ensuring your business remains productive and competitive in your industry. It is ideal for companies that are expanding, growing quickly, moving to a new location, or handling a new client or production line.
- Key Benefits of Leasing – Leasing office, business, or heavy equipment allows you to take advantage of fixed payment schedules with lower upfront costs. This preserves cash flow and allows you to build equity. You can also enjoy tax advantages and agree to purchase the equipment at fair market value or through a capital lease or lease-to-own contract.
- Potential Drawbacks of Leasing – Leasing may be less flexible than renting. You will be responsible for all equipment maintenance and repairs. If something happens to the equipment while you are using it, you may need to pay the leasing company a fee or penalty. If you are unable to make your scheduled payments, the equipment may be repossessed.
Deciding Between Leasing and Renting
Now we will put each model head-to-head. We will explore the factors that go into your decision so that you can better understand how to choose the right equipment option for your business:
- Assess Your Project Timeline – Consider how long you will need the equipment. If you need it for a short period of time or to complete one specific project, consider renting. However, if you don’t know how long you will need it or if you need it for a consistent, ongoing period, choose an equipment lease.
- Analyze Your Financial Situation – Consider your company’s financial health. Can you commit to fixed monthly payments plus fees and interest? If you can only commit to six months or less of monthly payments, consider renting your equipment. If you are in good financial health and can put together a long-term cost projection analysis, you can determine if you can afford to lease your equipment instead. Be sure to factor in the soft costs associated with leasing equipment as well, such as maintenance, repairs, and upgrades.
- Evaluate Your Equipment Needs – Evaluate your company’s equipment needs. If you need multiple pieces of large, expensive, or heavy-duty equipment, consider leasing. If you only need small equipment or know that your needs are temporary, rent the equipment.
- Consider Maintenance and Upkeep – Equipment maintenance and repairs can add a lot to your monthly or annual costs. If you only need the equipment for a short period and don’t want the added responsibility and cost of maintenance and repairs, choose a rental contract. If you need equipment long-term and can afford to pay outright for maintenance and repair costs, choose a lease.
Call ELGA to Explore Options for Equipment Leasing and Financing
Our equipment financing specialists at Equipment Leasing Group of America can help you better understand the differences between renting vs. leasing equipment. We’ll help you evaluate your company’s needs, explore the pros and cons, and determine which model is right for you. We pride ourselves on offering innovative financing with relentless commitment, and want to ensure you get the right contract for your company’s short-term and long-term goals.
While renting equipment offers short-term flexibility, leasing provides a strategic, long-term solution that allows you to build equity with a potential path to ownership.
The right choice depends on your business’s unique operational needs, project duration, and financial goals. Call us now or reach out to us online to explore your options for leasing business equipment in Chicago, IL, and the surrounding areas.