Is it better to lease equipment or take an equipment loan?

Q: Is it better to lease equipment or take an equipment loan?

It depends on your situation. With a loan, you own the equipment (once the loan is paid) and you can usually sell it or continue using it beyond the loan term. Loans make sense if the equipment has a long life and you want to build equity in it. Leases are like renting – they might have lower monthly payments and often allow easier upgrades to new models. A lease might be smart if the equipment could become obsolete quickly or if you want to preserve capital. However, leases can have higher effective interest rates and you don’t build ownership (unless it’s a lease-to-own structure). Many franchisees use loans for core long-lasting equipment, and leases for ancillary or short-life tech. Evaluating the total cost of each option is key.

It depends on your situation. With a loan, you own the equipment (once the loan is paid) and you can usually sell it or continue using it beyond the loan term. Loans make sense if the equipment has a long life and you want to build equity in it. Leases are like renting – they might have lower monthly payments and often allow easier upgrades to new models. A lease might be smart if the equipment could become obsolete quickly or if you want to preserve capital. However, leases can have higher effective interest rates and you don’t build ownership (unless it’s a lease-to-own structure). Many franchisees use loans for core long-lasting equipment, and leases for ancillary or short-life tech. Evaluating the total cost of each option is key.