Why Leasing Rates Matter Less Than You Think

Why Leasing Rates Matter Less Than You Think

Unless rates are outrageous, it makes very little difference what actual rate you pay for your equipment. Take someone financing a trencher for $75,000.

If you bought new equipment from a dealer and were approved at a 5% rate over 5 years, your payment would be about $1,400 a month (depending on total of dealer fees).  If you didn't use dealer financing, but did used a third party leasing/finance company (with good credit) your payment might be $1,600 a month or so, a difference of $200 a month.

Here's the deal - unless the amount of money you plan to make monthly from having that trencher is significantly more than $1,400 (or $1,600), you shouldn't be buying the trencher anyway. Most of the time, when we talk to people about buying a $75,000 piece of equipment, the income they would miss out on by not having that machine amounts to $10,000 a month or more. The $200 difference in payments is peanuts compared to the costs associated with not getting your equipment.

Additionally, the benefits associated with certain types of contracts  (tax-wise, bonding-wise, etc.) could eliminate the difference all together!

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