Reasons Why Companies Prefer To Lease

reasons why companies prefer to lease feature 2 | Reasons Why Companies Prefer To Lease
By Ryan Hendrie | 28th December 2017 | 5 min read

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Lease vs Buy. Which is better? Which is more cost-effective? Don’t know which one is for you and your business?

It can be a tough call to make, especially when considering that different industries benefit more than others from leasing or buying outright depending on the specific needs of that sector, so you need to consider the pros and cons in relation to your own unique business. It’s possible to lease almost anything you could buy, such as cars, property, IT and telecommunication equipment, printers, photocopiers, machinery, and even furniture. So, deciding the best option for all of these is a big ask and needs some careful consideration.

Many businesses are embracing the advantages of leasing the equipment they need to run their company rather than purchasing these assets. A lease means paying monthly for the item and then giving it back after the agreed term. You do not own the item either during or at the end of the lease, which is an important aspect which even puts some people off. However, thousands of companies still think this is the right decision for their business. We’re listing some of the biggest reasons why companies prefer to lease. These reasons are:

- You Get More Purchasing Power

- There Are 100% Finance Options

- You’re Not Responsible For Upkeep

- There Are Tax Benefits

- You Get Your Items Quickly

You Get More Purchasing Power

If you decide to lease something for your business, it can give you more freedom on the type of items you can afford. Paying monthly means you can get higher-end equipment that you usually wouldn’t have the money for otherwise. This means you have more purchasing power - the type of items you will be getting from leasing is often better, more functional and more powerful than the items you could get from owning or already own.

This could benefit your business a lot, depending on what you’re hoping to lease. If it is IT equipment or machinery needed to run your business, the availability and use of state of the art equipment would benefit you immensely and increase your company’s performance and therefore revenue, compared to if you purchased or already owned the items. This is the most common reason why a company would choose to lease something over being able to own it as an asset.


There Are 100% Finance Options 

For most leases, it’s possible to arrange a 100% finance option, which means there are no upfront, initial payments, which means more money to help your business grow in the day-to-day. You won’t have to find and put together any big initial payments, which a lot of people opt for even if they could afford an upfront payment for the convenience of having the extra money to play within their business.

You're Not Responsible For Upkeep

Lease packages are tailored to your needs, which means they can include maintenance of the items if they break. For a property lease, it is not necessarily needed, but for computers or machinery, this maintenance is exceedingly beneficial as it means if a breakdown occurs, the warranter will come and fix it or replace it immediately. This feature means you don’t need to worry about forking out every time something needs repairing and also saves you loads in the reduced amount of downtime companies have who lease key function items compared to those that own all the assets pivotal to the running of their business.

One reason why people can be averse to leasing rather than paying outright is that you could pay more money for the item overall (if you use it for an extended period) and then you don’t even own it at the end, meaning that leasing is not as cost-effective. However, if the continued use of the asset benefits the business then nothing is lost at all and as a bonus, you still have no disposal concerns. In fact, most people who lease consider it a financially more affordable option.

There Are Tax Benefits

Depending on what you want to lease, you can get some tax relief for choosing this option. Leasing costs can count as a deductible expense at the end of your financial year which may reduce the amount of tax you pay overall. On all items, except cars where rules differ from vehicle to vehicle, you can also claim back the VAT on your rental payments. This saves your business money each year end which is another reason why companies prefer to lease.

You Get Your Items Quickly

With leasing, depending on what the asset is, it’s usually done and dusted in a matter of days. The asset supplier, knowing the lessor will pay for the items, will deliver whatever it is quickly depending on availability that much more quickly. The turnaround on leased items is usually quicker than having to wait for relevant checks and money to clear, especially on big purchases, such as cars and offices or factories. Anyone who has rented a property and then gone on to buy one knows how much longer the process is for buying. There are so many cogs going on and other parties in most cases, so it usually works out quicker to lease.


Want To Know More About Leasing?

Being sure about the decisions you’re making for your business can be tricky. You’ll want to make sure you’ve considered all the angles and know the details of each option. After all, buying assets that cost an arm and a leg could make or break your business if it falls apart, while leasing everything may mean higher monthly costs and having no assets in your business. So how can you make a snap decision?

Download our free, ultimate guide to leasing which will break everything down for you about leases. Make a decision by getting in the know today.


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