An equipment loan is obtained with the express purpose of purchasing equipment for your business and outright owning the equipment at the end of the term. The equipment being financed secures the loan. So, if you can no longer afford your loan repayment, the equipment will be collected as collateral if you have not arranged for its sale. Alternatively, an equipment lease is a tool used to finance the asset for a temporary period of time, at the end of the lease term the asset will be reclaimed by the seller, or purchased by the lessee (you) at its current market value. Payments during the lease term are generally lower than a comparative equipment loan which makes leases attractive. This is a useful option for business owners who need an expensive piece of equipment for the long term, but can’t afford to purchase it outright from the start.
Leases are the more likely of the two finance options to cover additional soft costs of obtaining new equipment, such as shipping, installation and training.
