It is considered as most expensive when the very competitive auto repair industry depends significantly on sophisticated equipment. In the business operations of this industry, auto repair equipment like hydraulic lifts, alignment equipment, etc. plays the most significant role. They are indispensable in various repair services, although they are expensive. It is for this reason, in the auto repair industry; auto repair equipment lease is assuming greater importance.
Due to their unique nature, the traditional lending institutions may not be willing to finance the sophisticated auto repair equipment. To understand your needs and requirements, there are a few genuine financing companies. Under various categories and at better interest rates, they offer financial assistance.
So, what is an equipment lease financing, and how will it help your auto repair business grow?
There are small business owners who are focused on the day-to-day operations of making their company run. For upgrading aging equipment or to invest in equipment that could open up new lines of business, it might seem financially out of reach.
Along with keeping monthly payments low and cash flow healthy, equipment lease helps small business owners to invest only in growth. The following will explain to you how equipment lease works and when it should be your right choice for your business.
How Equipment Leasing Works
Equipment leasing is on the rise since business owners look for smart ways to invest in their companies, growing by 11% year-over-year since April 2018, according to the Equipment Leasing and finance association. What are your options while you are considering a new commercial vehicle for your business? You can quickly get a loan to pay off the vehicle over time, and you can also use your savings to purchase the vehicle. These are the most fitting solutions for the business owners who plan to keep the equipment for several years or who saved up for that specific purchase. When the money is tight, what would the business owners do, or are they balancing on their priorities that would need working capital? In this case, what is equipment lease financing’s value?
Without any hefty, upfront payments, equipment leasing companies make it easy for small businesses to get the equipment they need. You are responsible only for the payments on the equipment over the agreement terms when you enter into an equipment leasing agreement. There is no collateral that is required, and there is usually no down payment. Renew the lease or potentially have the equipment purchased at fair market value at the end of the term as you can return the equipment.
When Leasing May Be the Right Choice
There are other options such as commercial vehicle financing and heavy equipment loans as equipment leasing can be a great strategy to get the equipment that you need, and how would you know when leasing is the correct call?
There is some wide range of scenarios where leasing appears to be the right choice:
- You do not have the capital or the cash flow to commit to a loan as you need equipment for staying competitive or to complete the work.
- When you can’t meet a down payment or collateral requirement for purchasing an expensive piece of equipment, then an auto repair equipment lease can help you.
- Depending on your projects, technology and equipment need changes randomly within your industry.
- You need not want equipment purchases to tie you up all your operating capital, and your business is growing rapidly.
- You wish to go through a much simpler application process.
- You are in need of additional support. The leasing company might pay for the repairs, and it depends on your contract when you are leasing equipment.
- Once your lease ends, you might be in search of flexible contract terms, including purchasing, trading, or returning the equipment.
- You hope to capture the tax benefits. The cost of leasing equipment is up to $1 million may be completely deductible in the same tax year, with the IRS Section 179 tax deduction
The total price is the main downside to leasing. Leasing a piece of heavy equipment or a commercial vehicle can be more expensive leasing compared to that of financing the purchase. Leasing can significantly be the right choice for your business while you are looking at a more nuanced picture with different considerations that involve the current cash flow to tax implications to evolving equipment needs.
Almost all the automotive shop owners can now acquire the valuable automotive repair tools that are helped with an auto repair equipment lease. The finance companies out there provide the most straight forward approach as they offer their financial help. Their response time for approval is quite fast, and the application process is bare to a minimum. To get the financial help from them, even an online application is quite enough. So that the owners can pay their bills in low easy monthly installments, these companies offer advice at better terms.