Acquiring expensive assets through big ticket leasing—also known as large-ticket leasing—involves significant risk.
Usually, large corporations with many employees qualify for big ticket leasing. They lease high-cost equipment to grow or improve their operations.
These companies know what they will get in return for their equipment leasing investment.
If you’re planning to lease ‘big-ticket’ equipment for your business, then make sure to lease transaction equipment that will improve your business and give you a good return on investment (ROI).
This seems like an easy task, but many business owners fail to acquire the right investment for their business. That often results to huge financial loss or compromised productivity.
In this blog post, we’ll outline various profitable investments that will help you use your big ticket leasing effectively.
How to Use Your Big Ticket Leasing Effectively
The best way to use your big ticket leasing is by acquiring equipment that can improve the productivity of your business.
Otherwise, leasing random, somewhat-useful high-priced items can introduce severe financial problems in your business.
Before we list down the different profitable equipment, let’s first discuss when is the best time to lease equipment.
Know When to Lease Equipment
So, when exactly is the best time to lease equipment?
The truth is, it’s not about the time, but it’s about how well your business could cope to the obligations that come with leasing big-ticket equipment such as aircraft ships, boats and heavy industrial equipment.
If you’re not a fan of paying monthly installment, you could also just pay the equipment outright using your working capital.
That seems practical.
But take note, some companies prefer not using their capital to buy expensive items. They know that spending their capital involves huge risk.
By using your capital for outright payment, you risk your business to unpredictable expenses that may come. Hence, cause a cash shortage.
On the other hand, many industries prefer leasing equipment. They often choose to lease special equipment that needs regular updates.
Here are the reasons why it’s best to lease large-ticket equipment:
- Equipment leasing has a little or no upfront outlay,
- It has tax deductions,
- The maintenance contract can be included,
- Your monthly costs are predictable, and
- It keeps you from using obsolete equipment.
Large-ticket equipment leasing can help you keep up or even take advantage of your competitors while keeping a healthy budget and earning profit.
Equipment leasing also lets you control your funds well through a manageable monthly payment.
Now, here is the list of profitable assets that you can lease from big ticket leasing.
List of Profitable Equipment That You Can Lease with Large-Ticket Leasing
Leasing upgraded equipment can help your business in the long run. With updated machines, you can improve the production of your company.
Equipment leasing high-priced items gives you the buying power to buy top-notch equipment that can significantly help generate you a high ROI.
Here are some examples of profitable, expensive equipment that are often acquired through big ticket leasing.
Fleet of Commercial Vehicles
Acquiring vehicles for your business can cost you a lot of money. Therefore, it’s best to just lease trucks and trailers to avoid having cash flow problems because of the huge money upfront.
Examples of vehicles that are often leased by businesses:
- Passenger vans,
- Delivery vans,
- Box trucks,
- Tractors, and
Medical and Laboratory Equipment
Medical equipment such as X-ray machines, lasers, MRI and CT scanners, and surgical tables are often expensive. That’s why medical practitioners choose to lease medical and laboratory equipment.
Also, since medical apparatus are usually upgraded time to time, you don’t always have to cover the entire cost of purchasing the equipment if you decide to trade in half way through your equipment lease.
And when it’s time for you to change your equipment, you will not have to deal with selling or discarding the item. You simply have to return the equipment to the equipment leasing company.
Restaurant and Hospitality Equipment
Hotels and restaurants are a good example of high profit but risky businesses. The equipment you need for your daily operations are often pricey and needs to be replaced regularly.
For that reason, it’s best to just lease stoves, refrigerators, exhaust hoods, tables, seating, and a point-of-sale cash register system.
Heavy Building Construction Equipment
Heavy construction equipment such as dump trucks, backhoes, and other earth movers are expensive. Because of that, general contractors, roofers, remodelers, home builders, and excavation companies often choose to lease their equipment instead of buying them.
Computers and IT Equipment
Since computers and IT equipment are often upgraded every year, it’s not advisable to purchase them. You can’t sell outdated computers and IT equipment for a reasonable price.
With that said, your business will suffer a huge loss once you need to upgrade your IT equipment.
For that reason, it best to just lease computers, servers, software, phone systems, networking, and cabling.
Manufacturing and Industrial Equipment
Industrial equipment leasing is the best option for businesses in the manufacturing and industrial industry. That’s because the equipment that they use for their operations are costly.
Usually, business owners in this industry lease profitable heavy equipment such as stamping and forming machinery, forklifts, welders, and conveyor systems.
Leasing Expensive Equipment for Business
Large businesses have a variety of options for leasing expensive equipment because they have enough assets for the collateral cost. They can lease expensive equipment through banks and equipment leasing companies.
However, since leasing expensive items involves risk, banks usually set strict rules to their lessees. Local banks will usually require a lien on your whole business. Requiring you to have any new outside debt be subordinated by your local bank every time you want to borrow money somewhere else. They can decline the request to subordinate the lien and then you can't get anymore outside money.
Even if you have a large business, local banks may not approve your equipment lease application immediately. The process is grueling and the requirements can be daunting. Local banks will typically require ten to twenty percent down as the first payment.
Large businesses can set up their equipment lease on an operating lease agreement so their only paying 1-2% APR on their equipment lease and sometimes even a negative percent because equipment leasing companies can associate a ten to thirty percent residual value on the equipment with the plan to refurbish the equipment in the end and resell it or re lease it for profit down the road.
No doubt why many large businesses prefer leasing equipment from other equipment financing companies.
You can acquire any kind of expensive equipment through big ticket leasing.
Equipment financing companies such as Trust Capital offer this with fewer requirements and paperwork. In fact, you can even get the funds or the equipment you need right after the approval of your application.
Final Thoughts on Big Ticket Leasing
Equipment leasing is a great option for acquiring high-priced equipment. Many types of businesses use large-ticket leasing because it allows them to use the equipment without shelling out a big upfront payment. Most equipment leasing companies will ask for $0 down or no payments for the first three to six months.
Large businesses lease costly equipment even if they have enough capital. They usually prefer leasing over purchasing to avoid possible financial shortages in the future.
Large corporations usually apply for big ticket leasing through equipment leasing companies. Since traditional local banks have stricter equipment leasing rules and guidelines, many business owners get big ticket leasing from equipment financing companies; one of which that’s highly reputable is Trust Capital.
If you want to know more about big ticket leasing, you can reach Trust Capital at (866) 458-4777. Speak with a large-ticket equipment lease specialist that can run payment scenarios for you subject to credit approval and go over your tax benefits.