For any tire dealer, their shop equipment keeps their shop moving…literally! With the necessary equipment that it takes to run a tire shop, equipment costs are unavoidable. And for many tire dealers, the debate is if they should buy or lease their equipment.
Let’s talk about the pros and cons of each in this Tire Review Continental Tire Garage Studio video.
First, consider a big factor when you’re evaluating what to do: Your cash flow. There’s a myriad of financial pros and cons for both leasing and buying.
When you lease a piece of equipment, you can save cash for other expenses, which is an advantage. Leases often offer businesses more flexibility, too, compared to a loan when you buy a piece of equipment outright.
Yet a disadvantage of leasing is that it can be more expensive than buying after interest and fees are paid. Businesses need to weigh the cost of lease payments versus the cost of buying a piece of equipment, and the interest on a bank loan versus the interest on a lease cost.
Before you go into a lease or buy scenario, it’s important to consider more than just the monthly payment. Look at hours of operation and days of operation. Divide those into the monthly payment and find your actual cost of operation.
In addition, look at the tax benefits of buying vs. leasing. It’s important to consult your accountant to see what business deductions you might qualify for.
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