In Service for over 45+ yrs
For small businesses, there are two primary methods of financing: leasing and traditional bank loans. So which is better, financing or leasing? I mean, we are in the business of lease financing...so naturally we'd love to say our type of financing is best for everyone (wink). But it truly depends on your needs and situation. Check out our lease vs. loan rundown.
Most of us are familiar with traditional bank loans. Like an auto loan, you own the equipment, but the bank will put a lien on it until it's paid off. Once you make the last payment, the bank will release the lien and you own the equipment free and clear.
Rates, terms, and requirements can vary depending on the economy, the lender, your qualifications, and the equipment. Banks are highly regulated (not necessarily a bad thing), making them generally more conservative and risk averse. They often have a set credit model you must fit within to be approved for financing. They also have strict borrowing limits...potentially shutting the door on financing future purchases.
Now let's talk leasing. If you've leased a car in the past (or been warned about it), you might assume an equipment lease works the same way...that you'll be stuck with an outrageous buyout at the end of term. Not the case here!
In reality, the vast majority of equipment leasing is "lease-to-own". Over 90% of customers take ownership at the end of their lease term with an affordable buyout (anywhere from $1 to 10%).
For more insight and explanation on the difference between Bank Loans & Leasing check out the full article on Geneva Capital's Blog