When it comes to looking at new equipment, vehicles or new premises to expand, taking time to consider the impact it can have on your business is very important. Before deciding, it is crucial to take a few important factors into consideration:
Buying an asset can have many benefits and it is usually cheaper in the long run. When it comes to buying an asset it will depend on your current circumstances such as:
If you answered yes, then it sounds like it would make sense to invest in buying the asset however there is the financial impact that will need to be considered as well. If it would put the business at risk once the asset is bought, it would not be sensible to buy the asset.
When you lease an asset, you will be renting it out for a period of time. With a lease, you will not have ownership of the asset, the leasing company will while your business has exclusive use for the term of the lease. A typical lease will last from 12 months to 60 months however shorter leases are available however the premiums will be higher. Once you have entered a lease it can be difficult to leave and often the remaining months of the term will need to be paid.
It will make sense to lease if:
Another option is a hybrid option to finance the asset with a bank loan where you get the benefits of having the asset and monthly repayments.This will allow you to preserve your cash and fund other activities at the same time however there will likely be a need to pay interest on the loan.
Speak to the Saint Financial team for expert advice and what your business is able to next.
This article was written for Construction Insider by Saint Financial Group, a multidisciplinary group based in the UK that helps construction businesses develop and grow. SaintFG offers a range of quality solutions in supporting businesses.
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