Heavy equipment leasing is one way to finance heavy equipment—the other being using a loan for the equipment—and can either be done through a finance lease or a true lease.
In a true lease, the payments on the equipment lease are lower than with a finance lease, and the term of the loan is usually shorter as well. This sort of lease can good if the lessee only plans on being in a particular business for a few years before moving on to something. Alternatively, the lessee could purchase the heavy equipment at the end of the lease, if desired, at a cost usually somewhat lower than the cost would have been if the equipment had been purchased outright. A true lease can be beneficial for the lessor, since if the lessee chooses not buy the equipment they can still expect to get several more years of usage out of the equipment, as most true leases are a fair deal shorter than the equipment’s expected life time.
Heavy equipment leasing through a finance lease is almost always better than a true if the lessee wishes to buy the equipment when the lease expires. The reason for this is that the payments on a finance lease are higher than those for a true lease, and the term of the loan is usually longer as well, so that by the time the term of the lease has expired purchasing the equipment will only cost a small amount of additional money.
Besides using a lease for heavy equipment financing, one may instead choose to use a loan, which in many cases will save the buyer thousands of dollars through tax deductions upfront, as well over the life of the loan if the equipment is kept maintained.
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