The literature about small business loans is teeming with suggestions to lease medical equipment or buy it. Which advice should you follow? The answer is complicated, since leasing and buying relate specifically to your business assets and your needs. With information from the experts at Med Trust Capital, you may decide that a loan is the best investment for your practice.
Leasing often has fewer initial costs than getting a loan. Many lenders require a small down payment for a lease, and a larger down payment for a loan. Only you can determine how important it is for you to retain your existing capital as a liquid asset. If you are just getting your practice going and every penny counts, leasing may be your best choice. However, owning medical equipment you plan to use for many years is a wise, practical investment. If you have the capital, make the down payment and you will own the equipment completely once you are done. MedTrust DOES NOT require a down payment for a loan, which makes the decision simpler.
Leases often have a smaller payment, but there is a reason for that. The lease is just an equipment rental. Some types of medical equipment become obsolete very quickly. If you lease a piece of equipment on a five-year loan and you need an updated version after two years, you are still obligated to pay on the current lease for the existing piece of equipment. Buying out of the lease requires you to pay all remaining payments at once, which can be a significant outlay of money. You are also expected to follow strict instructions for maintaining leased equipment, since you do not own it. By making a larger regular payment, you will progress toward owning the equipment permanently. Once it is paid off, you can sell it if you like.
Ultimately, you should realize that lending and leasing are two medical financing solutions that you might use on different occasions. You may opt to lease equipment with a high rate of obsolescence on a short term. Purchasing machinery that lasts much longer will create a much better return on your investment. You can take advantage of tax breaks for both business purchases and leases. However, only one method allows you to keep the product at the end of the payment term. Most leases provide a buy-out option at the end, but you will have to make a residual, larger payment at that time to own the equipment outright.
The decision to lease or buy medical equipment is not easy to make, but there are a few common rules. If you can make the investment and the equipment you want to have will last a long time, you are probably better off buying it. Finding a medical practice financing organization like Med Trust Capital helps you to make the right decision.