Consider this quotation from the famous American industrialist and one-time richest man in the world, John Paul Getty:
"Buy what appreciates, lease what depreciates."
Houses, art, land and stocks and shares are typical examples of assets that appreciate. OK, they can all go down in price from time to time but the point is they generally rise in value. Motor cars, machinery and IT equipment all go down in value over time as they are used.
If you pay cash for equipment, you own it but you no longer have the cash. What's more, the value of what you bought is dropping, from the moment you take delivery. Add to that the fact that you can only take 25% of the value as a cost each year when it has made a 100% dent in your cash flow. As all good businessmen know, even the best businesses fail when they run out of cash.
And who is to say that your new equipment won't be out of date technology in three or four years time? Trying to sell obsolete technology on the second hand market to get some of your money back is a fool's game. Ask yourself: why do all airlines lease aeroplanes? Because the outlay in cash is prohibitive and there's new technology around the corner every year.
On the other hand, if you lease your equipment you are only paying for the use of it over the time you lease it: you've paid a month's rental and you've used it for a month! You keep most of your cash for purchases of assets which appreciate rather than sinking it all into an asset which depreciates.
Here are the key reasons most savvy people choose to lease rather than buy:
Leasing does require you to have a trading history and a decent credit rating however, as you are expected to be able to afford the payments over the term, so start-ups will struggle to obtain lease finance. Even if you have only been trading for a short time however, Bergmann Direct can usually set you up with some sort of facility for your recycling equipment although we cannot guarantee it.
Hopefully we've been able to convince you that leasing is the best option for you. Give us a call and in our quotation we will include weekly, or monthly payments over terms of three or five years.
We look forward to hearing from you.
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