Leasing vs Financing Secret Revolutionizes Business Equipment Costs
Cost Considerations
When evaluating leasing versus financing, it's essential to consider the total cost of ownership. Leasing might appear cheaper initially, but over time, the cumulative cost of lease payments could exceed the purchase price of the equipment. Conversely, financing requires a larger initial outlay but can be more economical in the long run if the equipment is used beyond the loan term.
Real-world examples illustrate these dynamics. For instance, a company leasing a $50,000 piece of machinery might pay $1,000 per month over a five-year term, totaling $60,000. In contrast, financing the same equipment with a loan at 5% interest over five years might result in total payments of approximately $56,000, assuming a $10,000 down payment3.