This debate has been a hot topic for debate among the SMEs for a long time now and the answer to this question depends upon the perception and suitability of the business owners. If your machine becomes out of date and inefficient in saving energy as well as a cost then procuring new advanced machinery is the only way available to the people. Leasing equipment or machinery is beneficial if the total cost of ownership is increasing over time because of the obsolete machinery which requires maintenance and repairing. Purchasing a brand new machine which requires frequent updates or upgrades will prove to be of total loss if you are just starting your business. Leasing allows you to replace the old machinery with the updated ones whenever required. It cuts off all the unwanted expenses.
The purchased machines used in the manufacturing industry after sometime will face a breakdown which will not be covered under the warranty thus you will have to pay the bill from your pocket. The cost of machinery and these extra costs on repairing and upgrading will slowly diminish your profit margin.
Isn’t this disturbing? Wouldn’t your business run on a loss?
Big companies having huge funding can manage this tacky situation but for the SMEs, this is too hard to recover from. Every manufacturing business these days require the best equipment and a smart machinery finance policy to stay in this competitive market, produce and deliver high-end products as well as services and to operate with utmost efficiency.
Benefits of Leasing the equipment or machinery
- Advanced equipment: With machinery finance, you will be able to upgrade your machinery or equipment after the completion of each leasing period.
- Balance in usage and cost: The leased machine equipment is actually profitable since the return provided is more than the cost of procuring them.
- Enhanced business value: A lease is never deemed as a long-term liability or debt. Hence, it makes your company profile more appealing to the investors and the lender whenever their aid is required.
- Bundle Machinery: You can easily procure several pieces of equipment in a single leasing package on monthly payments.
- Tax Advantage: A functioning lease is not considered as a purchase by the IRS thus no tax is calculated over it rather tax exemptions are available since the lease is deemed as an overhead expense.
Is purchasing the right decision you can make?
Buying the machinery or equipment by availing a machine loan might be the decision that suits your company the best. For instance, consider a machine which has a guaranteed long productive life and can function efficiently without requiring any upgrade or replacement. Then choosing to buy that machine with the help of the loan and not leasing it will be the best idea. Taking loans prevent from blocking a major amount of the money from your bank forever. You can repay the small portion of your debts along with interest every month if you purchase a machine by opting loans.
With a loan, you will be able to start utilizing the equipment right away while paying back the sum borrowed over the lifetime of the equipment. It is easy to generate huge earnings from the purchased equipment, to enhance the equity gain and paying back the loan within a short amount of time.
Benefits of machinery and equipment loans
An individual can avail these benefits:
- Increase in the savings of liquid cash on hand
- Enhanced exemption of corporate taxes
- The book value of business assets will increase
- Tax deduction for the depreciation of equipment and machinery
- The existing credit lines are preserved
Low rate of loans should not be the only concern
Yes, low loan rates are important but that is not everything when you are purchasing new equipment with finance. You must scrutinize the terms of each lender very carefully as it is necessary to know about the hidden fees and unpleasant terms and conditions (if any). There are several terms and conditions that may turn out to be a matter of concern if you avail the loan without making a proper study. Thus, it is best to compare the loans and equipment leases of different lenders to find the best one.
Finding the right financing specialist
From an NBFC to a bank, there are several lenders in the market from whom you can avail a machine loan. But whom should one choose? It is always best to take financial aid from the leader in the industry when it comes to the machine financing; Intec Capital understands the knits and grits of the machinery financing just like a pro-NBFC or bank. Hence, we always strive hard to deliver the smartest financial aid to our customers by customizing the loans in such a way that all of their needs for machine financing are met.