Need Some New Equipment? 4 Different Types of Leases
When you need new equipment to keep your construction business going, there are different lease options that are available on the market for you to consider. When it comes to renting equipment, you can get a fair market value lease, dollar buyout lease, sale-leaseback, or wrapping a lease.
Fair Market Lease
With a fair market lease, you pay to lease the equipment for a set time. When that set time is over, you can purchase the equipment at what is considered a fair market value that the equipment would hold at the end of your lease. If you decide you want to purchase the equipment, everything that you have paid so far during the leasing period would be subtracted from the fair market value of the equipment.
This is almost more of a financing program than a leasing program. If you lease the equipment long enough, you shouldn't have to pay very much when you purchase the equipment. The monthly payments with a fair market lease are usually lower and more reasonable.
Dollar Buyout Lease
Dollar buyout leases are similar in some ways to a fair market lease. At the end of the leasing period, you can purchase the equipment for a dollar. But in order to purchase the equipment for a dollar at the end of the leasing period, you generally face higher monthly payments. During the leasing term, you will pay the entire value of the cost of the vehicle. If you want to go this route, you really want to inspect the equipment and make sure the equipment is strong and stable before you rent it.
A sale-leaseback is a set-up where you sell equipment that you own to someone, and then lease the equipment from them. This arrangement allows you to keep using the equipment you already have while being able to tap into the equity of the equipment. The downside is you lose your equipment in the end, but you also get cash to invest in some new equipment that will help your business grow. It is a great type of transitional financing.
A wrapping lease is great if you have lots of equipment that you want to purchase. With a wrapping lease, the terms of the lease are flexible over time. You can add more equipment to the lease over time, and the lease payment adjusts and changes as you add more equipment to the lease. This type of lease allows you the flexibility to adjust as the needs of your business changes.
When it comes to getting equipment for your business, there are lots of different lease options, with varying monthly payment terms, which will allow you to lease and purchase the equipment you need. To learn more, contact services such as LeaseSource.