To Lease or to Buy? That is the (Commercial Laundry) Question!
While the statement may not be as serious as Shakespeare's play Hamlet (To exist or not to exist, that is the question), for some businesses, building a new laundry facility or upgrading an existing one may be the deal breaker to being competitive, efficient, and, for some, even exist.
Even if you consider building or upgrading, it might be a good time to reflect on how you acquire and pay for your laundry equipment. The article below provides an unbiased view of which might work for you.
The decision to invest in laundry equipment presents a dilemma: to purchase or to lease. Each has its benefits and drawbacks, but with the right financing or leasing program, laundry owners can make a strategic choice that aligns with their business goals and financial circumstances.
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When does purchasing make sense?
Purchasing laundry equipment offers the advantage of long-term ownership and potential asset depreciation benefits, as the depreciation of commercial laundry equipment impacts financial statements and tax liabilities over time. It’s a good conversation to have with your accountant since
Purchasing may also require a significant upfront investment, which may strain finances, especially for small businesses. Additionally, owners are responsible for maintenance, repairs, and eventual replacement of the equipment, which can add to the total cost of ownership over time.
Financing rates can vary, but locking in your interest rate may allow you to adequately have consistent, manageable monthly payments and budget. Variable interest rates can help when the rate goes down, but there is also some risk when rates increase, so you should weigh the pluses and minuses of variable interest rates.
Purchasing also allows you to have complete control over customization. This means that you may be able to modify or tailor the equipment to suit your specific needs or preferences. When you own the equipment outright, you can adjust settings, install upgrades or accessories, or implement specialized features to optimize performance for your business requirements. This level of control allows you to adapt the equipment to better fit your workflow, efficiency goals, or unique operational demands without restrictions imposed by a leasing agreement.
When does leasing make sense?
Leasing laundry equipment (similar to cars) gets a bad rap. While there can be drawbacks, leasing can still be a viable option for businesses seeking flexibility and cost-effective access to equipment without significant upfront investments.
It also allows owners to reduce ongoing expenses since lease agreements often include maintenance services, alleviating the burden of ongoing equipment upkeep. Lease payments are also often tax-deductible, which can help lower overall tax liabilities, resulting in significant savings over the lease term. Leveraging these tax advantages allows business owners to optimize their financial position and allocate resources more effectively toward other operational needs or growth initiatives.
Leasing laundry equipment presents an opportunity to enhance operational efficiency, yielding long-term benefits for businesses. Incorporating the latest advanced technology, owners can significantly improve wash and dry times, optimizing productivity and throughput. These efficiency gains translate into time and cost savings over the equipment's lifespan, contributing to improved overall profitability for the business.
A related benefit of leasing is the ability to access state-of-the-art technology and higher-end machinery without the upfront investment required for purchasing. New technologies may include features such as card payment processing and Wi-Fi connectivity, which streamline transactions and enhance user experience. As the technology evolves, leased equipment can be easily upgraded or replaced, ensuring businesses can access the latest innovations and remain competitive.
Some lease agreements come with various restrictions or penalties that can be perceived as burdensome. These may include usage limits, maintenance requirements, or penalties for terminating the lease early. A quick consult with one of our team members can determine if these are an issue.
Lastly, customization of your equipment may be limited since the lessee does not own the equipment outright, restricting owners from significant modifications or alterations to the machinery. Also, since the lessor retains ownership, lessees must adhere to the terms of the lease agreement, which may include limitations on modifications. Consequently, businesses may find their customization options restricted when leasing laundry equipment compared to owning it outright.
Making the Right Choice
Ultimately, buying and leasing depends on your budget, management preferences, and equipment needs. Regardless of your decision, below are a few tips to consider when making a decision:
- Define Your Requirements: Start by assessing your business's specific needs, including the size, capacity, and any special features required for your washers and dryers.
- Research Leasing Providers: Look for companies specializing in commercial laundry equipment. AAdvantage offers several providers for both leasing and financing, but like a contract, you should review the providers, compare prices, and evaluate the terms to find the right fit for your business.
- Negotiate Favorable Terms: Once you've identified a potential leasing or financing partner, negotiate to secure favorable terms by discussing equipment pricing, lease duration, and additional services such as maintenance and repairs.
- Review the Agreement: Before signing on the dotted line, carefully review the agreement, paying close attention to terms such as warranty, early termination fees, and options for equipment upgrades.
- Manage Payments: Budget accordingly to ensure you can make your monthly payments on time, keeping your business's finances on track.
One of the benefits of being one of the largest commercial laundry distributors in the US is our ability to provide the best equipment with the best financing and leasing terms. We’ve provided leasing and financing options to this industry since 1996.
Convenient Options That Fit Into Every Budget
We offer three convenient ways to acquire equipment in response to customer feedback. Below are a few benefits and features of each program.
| CleanCare Leasing | RightRoute Leasing | AAdvantage Financing |
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Have More Questions?
We hope this article has been helpful, but if you need an expert opinion, our team can answer your questions and help evaluate your needs.
Contact us today to talk or to request a quote.