Why lease equipment instead of paying cash?
Leasing lets you put the equipment to work now and pay for it with the money it earns, while your cash stays in the bank for payroll, materials and the surprises every business runs into. Here is the plain truth on when leasing makes sense, what it really costs and the fine print most people never read.
Six reasons businesses lease
Cash is the hardest money to replace. A lease spreads the cost of equipment over the years you use it, so the machine pays for itself instead of draining your working capital.
Leasing vs. paying cash vs. a bank loan
| Lease / EFA | Pay cash | Bank loan | |
|---|---|---|---|
| Money down | 0 to 2 payments | 100% | 10–20% typical |
| Approval speed | Often 24–48 hours | None needed | Weeks, lots of paperwork |
| Uses your bank line | No | No | Often yes |
| Soft costs covered | Often | You pay | Rarely |
| Credit flexibility | Wider range of profiles | n/a | Strict |
| Total cost | Payments + interest | Lowest on paper, but cash is gone | Usually lowest rate if you qualify |
Cash is cheapest on paper, but only if you will never need that cash for anything else. For most growing companies, the cost of running short on working capital is higher than the cost of financing.
What most people don’t know about equipment leases
Leases are non-cancellable
An equipment lease or equipment finance agreement (EFA) is a commitment for the full term. If you stop needing the machine, you still owe the payments: roughly your monthly payment times the months left. Some lenders offer an early payoff discount, many do not, so ask before you sign.
Pre-funding the vendor
Some deals release money to the vendor before the equipment is delivered. That helps the vendor build or ship, but the risk sits with you: delays, non-delivery or the wrong equipment. Your payments can start even if the machine is late. Buy from reputable vendors and get delivery dates in writing.
Dealer “retail finance agreements” are different
Financing arranged at the dealer is often a retail installment contract, not a true lease. These may allow early payoff with interest savings, but they can carry higher rates or dealer markups. Compare the total cost, not just the payment.
Watch: how leasing can fund your equipment
Funding your equipment.
Turned down by your bank? Watch this.
Leasing, renting or financing a commercial truck: pros and cons of each.
Why lease through Liberty Capital Group
What lenders usually look at
- Time in business (2+ years opens the most options; startups considered)
- Personal credit of the owner(s)
- Recent business bank statements
- Equipment quote or invoice
- Larger amounts may need financial statements or tax returns
See where you stand with the approval indicator.
$99 a month to start
For well-qualified businesses (strong credit, 3+ years in business and quality equipment) some programs start at $99 a month for the first 3 or 6 months. Ask us if you qualify.
From quote to delivery in four steps
- Apply in 3 minutesA short online application, no cost and no obligation.
- Get your optionsWe compare lenders and show you the terms side by side.
- Sign the documentsE-sign the lease or EFA once you are happy with the numbers.
- We pay the vendorYour equipment is delivered and goes to work.
Why lease equipment: common questions
Is it better to lease or buy equipment?
If you have plenty of spare cash and plan to keep the equipment for many years, buying can cost less. If cash is tight, the equipment makes you money right away, or it becomes outdated quickly, leasing usually makes more sense because it keeps your working capital free.
Can I cancel an equipment lease early?
Usually not. Equipment leases and EFAs are non-cancellable, so you are responsible for the full term. Some lenders offer an early payoff discount; ask before you sign.
What is pre-funding?
Pre-funding means the lender pays the vendor before the equipment is delivered. It carries risk for you (delays, non-delivery or the wrong equipment), so only pre-fund with vendors you trust and get delivery dates in writing.
Do I own the equipment at the end?
It depends on the structure. With a $1 buyout lease or an EFA you own it at the end. With a fair market value lease you can buy it, return it or upgrade.
Can I deduct lease payments?
Many businesses can deduct payments or depreciation, and Section 179 may allow a full first-year write-off. Tax rules depend on your situation, so confirm with your CPA.
Can I lease used equipment?
Yes. We finance new and used equipment from dealers and many private-party sellers, subject to age and condition.
Ready to see what leasing would cost?
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All financing subject to credit approval; terms vary by credit, time in business, financials and equipment. Liberty Capital Group, Inc. is not a tax advisor. NMLS #2009539 · CA DFPI #60-DBO49692.