Six Benefits of an Equipment Leasing Loan

Published August 6, 2019 by WC Team

Computers, printers, furniture and specialized machinery are crucial items for most businesses. Whether you are just starting out and have nothing or your present stockpile needs a serious upgrade, enhancing or changing your equipment can amount to big money. That is where equipment leasing loans can make such a difference.

Preserve The Cash Flow

Even though you need to obtain equipment, that does not mean that you can put aside all of your other expenses. After all, you still need to meet payroll, keep your inventory stocked and cover emergencies, among many other priorities. Equipment leasing loans enable you to use the equipment itself as collateral without being forced to contribute capital that you need to utilize for other priorities.

Speed and Convenience

Anyone who has gone to a conventional lending source knows how protracted and involved the loan process can be. In many cases, months can go by before you get an answer, and sometimes the verdict is not in your favor. By contrast, equipment leasing loans can often be obtained much more easily and quickly. This is because they are considered to be of lower risk to the lender since the equipment can be repossessed should you default.

Retail Capital

When you get a loan that enables you to lease your equipment, you are not buying it outright and are spending less money as a result. This means that you have more funds to put toward growing your business in other directions.

Total Financing

When you get an equipment loan in order to lease your furniture or machinery instead of buying it outright, you will generally not be required to provide an additional down payment. Instead, 100 percent of your financing, including taxes, interest, training, delivery and sales charges, will happen through the lease.

Manage The Life Cycles Of Your Equipment

When you buy your furniture and computers, they immediately become yours, and repairing, replacing or upgrading them is entirely your responsibility. On the other hand, leasing gives you the ability to make needed modifications when your contract ends. In the case of high-tech items, this is a huge advantage.

Potential Tax Savings

Getting a loan that enables you to lease instead of buying your equipment can also come in handy when tax time rolls around. Section 179 of federal tax laws gives equipment leasing a tax exempt status for qualified new and used business equipment.

For many companies, it is impossible to carry out day-to-day operations without costly equipment. If you count yourself as one of these, consider obtaining an equipment leasing loan. The benefits and advantages are hard to deny.

Are you a business owner? Apply for financing. Start Now.

24 Comments

Eloise Branch

Sep 7, 2020 12:28 PM

Where are the six benefits to choosing an equipment lease versus an equipent loan? Isn't that more valuable than what's written here?

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Elijah Burgess

Sep 7, 2020 12:28 PM

There are a lot of choices when it comes to equipment financing and equipment leasing. I've financed a bunch of vehicles with Amur. I think they're located in Nebraska, but I met them through a truck vendor out here in Gilbert, AZ.

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Chelsea Sellers

Sep 7, 2020 12:28 PM

The biggest benefit to equipment leasing and equipment financing are that the product fills a void. I mean, not sure what everyone has seen, but it ain't easy to get commercial truck equipment financing when you're a trucking company with less than five years time in business.

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Catalina Castillo

Sep 7, 2020 12:28 PM

True that, Chelsea! We're a husband and wife trucking team out of Denton. While we have four long haul trucks in our fleet, we don't have the time in business to get financing on new trucks beyong one single truck. That being said, we use equipment financing and leasing to finance our trucks and trailers (which are all used, by the way).

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Vipul Shah

Sep 7, 2020 12:28 PM

We are also leasing our trucks through Amur. Small world! We met Amur through our truck vendor in Lewisville (Texas). We haul between Texas, Arkansas and Oklahoma and have about ten trucks on the road. While we're only operating with three years in business, each year we're adding between three to five drivers. We're not buying any new power units, so everything is used equipment financing for us.

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Eusebio Davila

Sep 7, 2020 12:28 PM

Commercial truck financing is by the far the easiest type of financing you can get right now. While banks may not touch you, there are a ton of equipment financing and equipment leasing companies out there to help commercial truckers.

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Bruce Huerta

Sep 7, 2020 12:28 PM

If you're looking for the best commercial truck financing, here are my top four: Bryn Mawr Funding (I think they're known as Bryn Mawr Trust or something to that effect, North Mill Equipment Financing, Financial Pacific Leasing and Amur.

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Jewel Campos

Sep 7, 2020 12:28 PM

I'm with you, compa. I've used Bryn Mawr many times commercial truck financing. I don't do equipment leasing because it's been my experience that you make all the payments and then the equipment leasing company hits you with the unexpected balloon payment. For the most part, all of the experiences that I've had in commercial truck financing, from dealers, both independents and franchise dealers..hell, even private-party deals, no one uses equipment leasing. They're usually just straight up equipment financing, equipment loans, or what is called equipment leasing, but dollar buyouts as the residual. Otherwise, these contracts will bankrupt you! Oh, one thing that I gotta bring up is the Evergreen Clause! Do ya'll know about that?

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Addie Reed

Sep 7, 2020 12:28 PM

Our equipment financing agreements have all been leases believe it or not. We prefer it that way. We buy new Kenworth power units and lease them from the manufacturer. I was with a different trucking company before starting our own and they were the same. Maybe I'm just copying what we did at my previous employer. I just tend to think that smaller payments over the course of the 72 or 84 month term is better than a bigger payment with no residual on the backend. It's like my husband says, "if there's a $hit storm, I just want to know which way the winds blowing!" With equipment leasing, or True Leases, we know we have lower payments throughout the term and manage our cash flow well, we can put away money here and there because we're planning for the baloon payment.

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Elise Giles

Sep 7, 2020 12:28 PM

I think the real benefit of an equipment lease is that you can expense the entire payment off pre-tax income. When we meet with our accountant each year, we get to the section of leases and it's my favorite part (apart from depreciation) because the payments actually work for us and we're able to use pre-tax income to pay for them.

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Dwight Gonzales

Sep 7, 2020 12:28 PM

Agreed! I can definitely relate. We expense all of our equipment lease payments off the top line. I would have to agree that equipment leasing is the way to go. It's basic time value money, right?

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Jc Williams

Sep 7, 2020 12:28 PM

Yup, it's Time Value Money-basic Econ 101. Money is worth now than it will be in the future. Lease your equipment, don't finance it! BTW, you can always negotiate the baloon payment on the backend or you can re-finance the baloon payment on the backend. I've been doing that for over a decade. Most equipment leasing companies will allow you to refi the baloon payment on the equipment lease.

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Natalie Stevenson

Sep 7, 2020 12:28 PM

Not sure what's wrong with this article, but it's seemingly useless. I don't see any practical information about why small busines owners should use equipment leasing over paying cash

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Sonia Rubio

Sep 7, 2020 12:28 PM

I think the most important thing about choosing an equipment lease is that the bulk of the equipment leasing companies all have the same rates and the same terms. For example, for small ticket leasing, expect 10%-20% APR and about $500 total fees per contract. That's if you're not a start-up. Companies like Pawnee Leasing (https://www.pawneeleasing.com) and Financial Pacific Leasing (https://www.finpac.com/) both focus on lower tier credits and have start-up programs for those looking for equipment financing <$50K. If you're looking for micro-ticket equipment leasing and equipment financing, there's a company in Massachusets called Time Payment Corp (https://timepayment.com). As far as I know, they won't financed titled vehicles, but apart from that, they'll finance virtually anything, from carpet tiles, inflatables for party rental companies and video games for amusement companies.

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Adrian Owens

Sep 7, 2020 12:28 PM

J. Paul Getty: lease that which depreciates, buy that which appreciates!

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Chi Roberson

Sep 7, 2020 12:28 PM

Equipment Leases were built to benefit the airline industry. They lease their planes and engines separately. It’s a tactic and the strategy that has long been followed by other large corporations. The tax code was built by lawmakers who are and remain heavily influenced by Politcal Action Committees (PACs). The PACs finance the election and then get to provide input when laws are made. Equipment financing and leasing is no exception!

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Adalberto Boyer

Sep 7, 2020 12:28 PM

I think the main takeaway in this article is that equipment leasing serves small business owners. I've found that equipment leasing is best done through a third party type company because banks advertise that they do equipment leases, but they can never seen to get the ball to the end zone. What I mean by that is that for titled vehicles, like what everyone's talking about here (commercial truck financing and commercial truck leasing), I meant it just seems to drag on and on. Doing an equipment lease using a vendor is one thing, but private party deals are always a disaster.

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Summer Delgado

Sep 7, 2020 12:28 PM

Most people I know use equipment leasing for floor equipment like surface prep. Tenant and the other brands make it super easy to finance this equipment using their 0% offers. It’s not leasing technically because at the end you own it outright. I don’t have any experience with commercial truck financing, though I lease my two Dodge Rams and a Ford F550

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Renee Santos

Sep 7, 2020 12:28 PM

Equipment leasing and financing is best for vehicles. If you’re interested in commercial truck financing, it’s best done at the dealer level. When buying new power units or new trailers, the manufacturer will generally offer some introductory financing like 2.99%, or in some awesome cases 0% fianancing. Commercial trucks and commercial trailers are excellent collateral and have fantastic secondary market value. They basically hold their value. Restaurant equipment won’t hold its value amd that’s the reason why the best offers exist mainly for commercial truck financing.

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Geraldine Allen

Sep 7, 2020 12:28 PM

Commercial Truck financing is an art unto itself. You definitely don't want to buy the equipment at the same time you're shopping for financing. Think about it, if this concept sounds foreign to you, think about how it works on the consumer side of things. You want to buy a truck and you see a great offer on TV. They're talking about 0% financing or $5,000 cash back. Seen that offer before? I bet you have. So, what's the game? The game is that both the truck manufacturer and the financing arm are owned by the same company. They can lower the price on the asset, which then makes the financing seem cheaper, or even free.

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Ollie Kent

Sep 7, 2020 12:28 PM

Word to the wise, if you're looking for the best financing, don't use the dealer. They're all about smoke and mirrors when it comes to manipulating the price of the commercial truck or trailer and then modulating the rate to go up or down. Buyer beware. I would find your financing from one place and the vehicle from another. Oh, and another piece of advice. Buy used only if you haul short distances and have a trusted mechanic that you can lean on (locally). You don't want to buy used and have a great mechanic at home, but find yourself stranded 2000 miles from homebase.

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Jason Brock

Sep 7, 2020 12:28 PM

Ollie, I get what you're saying I think. So, from your findings, find the financing first outside of the dealer and then put the two together once you've found the rigth commercial truck or trailer? Is that what you mean? The problem I see with that is that usually the dealer makes it all too easy to find the right commercial truck or trailer and then use their financing. Every day we waste and we're not on the road is wasted money.

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Noble Schneider

Sep 7, 2020 12:28 PM

When it comes to leasing commercial trucks, you'll want to have the financing squared away before bidding on a truck or trailer. What I like to do is find the perfect financing first and a lot of times that's not at a truck dealer or at a bank. I tend to work through 3-5 equipment leasing companies. I basically put it out to bid. Since there isn't any material impact to my personal or business credit, I let them race to the bottom to get me the best rate and payment. Once I have a firm committment on the financing, then I shop with confidence. When the dealers try and offer me equipment financing, sure I'll take a look at whatever offer they have, but generally it's only on new equipment. From talking with the sales guys, I know how the game works. The dealers themselves make commissions for kicking back deals to the equipment leasing companies. So, naturally, they're going to present the best lender that works for them and not necessarily for you. Average kickback/commissions is 1-5 points on the total financed amount. We're definitely not talking abou pennies! At any rate, my best advice? Secure the financing first. Shop with confidence whether new or used and grind them seller down on the price. Don't let the commercial truck vendor school you why the collateral is worth X, while playing with the financing behind your back. They tend to manipulate the #s when they know you're planning to not only make them purchase with them, but also finance or lease the vehicle through them as well.

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Daren Krause

Sep 7, 2020 12:28 PM

I've used BMT a few times on commercial truck financing. Pretty smooth process. Kinda fee happy if you ask me. In the end, we're happy with the service we got though. IMO, equipment financing and leasing are pretty commoditized.

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