| Two Options to Construction Equipment Financing | | Print | |
| Written by Hilton Patterson | ||||||
| Friday, 19 December 2008 | ||||||
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Thinking of getting construction equipment financing? If you look at it carefully, there are two options. You either lease or you buy the equipment outright with a loan. A construction equipment owner has to consider both options, both of which have benefits and drawbacks.
Thinking of getting construction equipment financing? If you look at it carefully, there are two options. You either lease or you buy the equipment outright with a loan. A construction equipment owner has to consider both options, both of which have benefits and drawbacks. Construction Equipment Purchased With a Business Loan Heavy construction equipment does not become obsolete during the life of the equipment. Construction equipment is very durable. With proper equipment maintenence, heavy duty construction equipment will last for years past what a lease would offer. Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. Keep in mind however, that unsecured business lines not requiring collateral are available for businesses needing the extra working capital. Furthermore, the equipment that is bought can be counted on taxes as depreciation. Leasing Construction Equipment Has Its Benefits The primary benefit of leasing construction equipment is that it offers great tax benefits to business owners. This is particularly true in a "true lease" where there is 100% deduction on taxes. If you do not know what we mean by a true lease, the Internal Revenue Service uses the term "true lease" to define how it is structured. The thing about a true release is that the business owner can claim the entire lease payment off on business taxes, For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details. Most business owners like the notion of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. This makes it much easier on businesses that are startups especially. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget. Plan Early for Your Construction Business Whatever course you select, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. Think long and hard about the long term goals of your construction company. Article Author: Need money for your construction business? Wall Street Capital Financing can help! Read more at Financing Construction Equipment.
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| Last Updated ( Saturday, 21 August 2010 ) | ||||||
