Diving deeper into equipment financing versus leasing can help you make a more informed decision about which option is best for you and your business.

Financing Cat equipment could be an excellent option for your business if you are interested in preserving cash flow and paying over time. Cat Financial can offer competitive rates and flexibility that other financial institutions may not.

Reasons to finance a Cat® machine: 

• Spread out the financial obligation: Financing equipment allows you to spread out the total cost over a more extended period. Instead of making a large payment all at once, you can make smaller payments across months or years, otherwise known as paying in installments. Personalized payment schedules can be implemented for qualified customers.

• Multiple financing options: There are typically numerous financing options available for companies. The various options can feature different interest rates or monthly sums. You can work with the financing firm to select the best plan for your needs. For instance, dependable finance companies like Cat® Financial offer various financing options.

• Acquire multiple machines at once: Financing is a great way to get multiple pieces of equipment simultaneously. You can invest significantly to grow your business and take on more work by paying for equipment over time rather than in total upfront. 

• Special Offers: Cat Financial typically offers special financing rates for new and used Cat equipment. These limited-time offers can help you save on interest. Contact your local Cat dealer to see what offers are available in your area.

With an equipment lease, you can use equipment to the fullest for a certain amount of time. Three years is a common lease term. Once the lease ends, customers have multiple options for what to do with the equipment.

Here are more great reasons to lease heavy equipment:

1. Good for Short-Term Needs

Leases can accommodate short-term projects and needs. An upcoming project might need machinery your company doesn't own or have available in the equipment fleet. Instead of investing, you can lease the machine for the project's duration. That way, you stay within your budget and complete the job. You don't have to invest in equipment you only plan to use once.

2. Lower Budget Impact

Leasing can also have a lower impact on your company's budget. A lease involves a fixed monthly payment, often lower than financing payments. You may not have to pay extra interest fees each month or make a down payment at the time of purchase. Some lessors like Cat Financial offer 100% financing for qualified customers, which includes coverage for delivery fees and other taxes. With 100% financing, you avoid down payments or additional upfront costs.

With less financial responsibility each month, you have more control over your available credit. You can use the additional capital for other business needs. And you can plan your monthly expenses more efficiently with a consistent monthly payment amount. Overall, leasing allows you to get new equipment with a minimal financial impact on your business.

3. Try New Equipment Features and Technology

Another advantage of leases is testing the latest equipment features and technology. Lessors typically supply a wide variety of equipment options, including newer models with the latest technology. Thus, allowing you to try it before you buy it. 

4. Flexible Payment Options

Lastly, leases for heavy equipment are available in many different options. Financial firms offer a variety of payment structures, from monthly to semi-annually. You can work with your provider to find the right payment amount and schedule for your company. Leases are also typically quicker to set up than financing agreements, making it easier to get started with the equipment.

If your schedule changes and you finish with the equipment earlier than expected, many lease providers can also help you complete your financial obligations early.

Cat Financial offers three options to qualified customers at the lease end:

1. Return the equipment
2. Extend your lease
3. Purchase the machine

Another leasing option is a lease to own. For Cat Financial, this is our finance lease. With finance leases, you make regular payments on equipment over a specific time. The financial institution retains equipment ownership until you have completed all payments, then ownership transfers.

Leasing to own is an excellent choice for companies that want to own the equipment. You can maintain a monthly payment while deciding whether the machinery meets your needs. This option also makes it easier to purchase heavy equipment that is out of your budget.

A lease-to-own structure usually follows three steps:

1. You enter a lease agreement with the option of purchasing the equipment once the lease ends.

2. The lessor calculates a percentage of each payment that will contribute to the overall purchase price.

3. Once the lease ends and all payments are satisfied, you can pay the remaining balance to gain complete ownership.

This structure can sometimes cause you to pay a higher overall equipment cost. Companies should ensure they will have the means to pay the leftover balance once the lease ends. If not, they'll have to return the equipment.