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Business Financing

Equipment Financing

Buy or lease—which is right for you?

Leasing may be your preferred option if you have limited capital or you are purchasing equipment that must be upgraded every few years. Buying can be the right option for purchases that have a long usable life. Each business need is unique—here are a few things to consider.

information about advantages and disadvantages of buying and leasing.BuyingLeasing
Down paymentMost banks require a down payment of around 10-20%.Leases rarely require a down payment.
Soft costsSoft costs are not financed.You can finance up to 20% for soft costs such as taxes, freight and delivery.
OwnershipYou have ownership from the start of the term.You have multiple options at the end of the term, including assuming ownership or purchasing for $1 or fair market value.
TaxesFootnote1Tax incentives may include depreciation deductions and full cost deductions under Section 179 of the Internal Revenue Code.Lease payments can usually be deducted under Section 179 of the Internal Revenue Code, lowering your net cost.
UpgradesCertain equipment may have little resale value or may quickly become obsolete.Replacing equipment that's obsolete is easier to do when your lease expires.
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As you consider whether to buy or lease, ask yourself: What type of equipment or vehicles do you need? How much cash do you have on hand? Will your purchase need to be upgraded due to obsolescence? Consider the financial impacts of each option on your business—and be sure to discuss the tax implications with a tax professional.

Soft costs

Soft costs are costs associated with the purchase of an item that are not part of the item price. For example, taxes, freight charges and delivery fees are soft costs.