Should I Buy, Lease, or Finance My Work Equipment?

If you’re a self-employed tradesperson, work equipment can be one of your biggest expenses.

Buying this equipment is necessary to do your job properly, but it can be a big obstacle, especially when you’re just starting out and might be short on cash.

In places like Mackay, with its thriving mining industry and all the associated jobs, finding equipment for work is a common challenge. This can range from vehicles to industry-specific tools.

One of the most common ways people approach this challenge is by financing their work equipment with a loan and paying in instalments over time instead of making a big one-off purchase.

There are other options too — like leasing the equipment or paying upfront. In this article, we’ll take a look at the different options and hopefully help you decide which is best for you.


Why Buy Your Work Equipment Upfront?

Paying for your equipment in full, upfront is often the best choice in a number of circumstances. Here are some reasons to consider buying your equipment outright:

  • If you know you’ll be using the equipment for a long time and have no plans to replace it for a long while
  • If you have a lot of spare capital
  • If owning the equipment outright is important to you — you’ll get the peace of mind of not having to make regular payments
  • If the particular type of equipment is unlikely to become outdated or require replacing any time soon

The downside to buying upfront like this is mainly cost. You’ll be siphoning cash away from other areas of your business, and if you’re just getting started every cent counts.


Why Lease Your Work Equipment?

If paying for your equipment in full isn’t ideal for you, another option is to lease the equipment. Here, you’re essentially renting the equipment for a certain period of time, paying a regular but manageable fee to do so. 

Here are some reasons you might consider leasing your work equipment:

  • There’s no massive upfront cost to deal with, and you can save your budget for other things
  • There’s usually no down payment required
  • Leasing agreements are usually fairly easy to obtain and more flexible than loans
  • It allows you to get the most up-to-date equipment. This is typically the most expensive option, and it may not be possible to buy outright. Leasing your equipment allows you to afford the best tools for the job.

However, there are some downsides to leasing work equipment. For example:

  • You’ll never truly own the equipment — you’re basically renting it and at the end of the lease it still won’t be yours
  • You’re usually tied into the full term, and face penalties for leaving the agreement early
  • Leasing tends to be more expensive in the long run compared to buying


Why Buy Your Equipment on Finance?

A third option is to finance your equipment with a loan. This provides a mix of both options — you have the ability to pay for your equipment in manageable chunks, but you’ll actually own it at the end of the term.

Equipment loans are also usually easy to qualify for (compared to more traditional loans like mortgages and car loans), even for people with poor credit. This is largely because it’s quite easy for lenders to simply seize the equipment back if you default on your loan. 

For the same reason, you can usually qualify for these loans without the need for any collateral — the equipment itself serves this purpose.

Another benefit of financing equipment relates to tax. It may be possible to gain tax benefits or make deductions based on your financed equipment. This is one area where a professional will be able to help you make the best decision.


Why Use a Broker?

If you do choose to buy your equipment on finance, one of the best ways to do this is via a broker. Here are a few reasons why you should consider working with a broker:

  • They have the benefit of many years of experience and professional knowledge
  • Brokers can comb through a large number of potential lenders to help you find the best deal for you, including some deals that may not be available to the public
  • They’ll guide you through the process and help you deal with any issues or questions

At Lynam Home Loans, we have many years of experience helping people in Mackay get great deals on their equipment loans. We’ll help you through the entire process and make sure you have everything you need to make an informed decision for your business.

To find out how we could help you, get in touch with us.


Barry Lynam Mortgage Broker

Barry Lynam