Navigating Business Expansion: Choosing Between Buying and Leasing Plant and Equipment

Earth moving equipment

When it comes to acquiring new plant or equipment for your business, the pivotal decision of whether to buy or lease requires careful consideration. While the choice ultimately hinges on your unique circumstances, several fundamental factors can guide you in making an informed decision.

Advantages of Buying

Certainty and Ownership:

    • Pros: Ownership provides certainty and control over the equipment. You have the flexibility to modify it according to your business needs and the freedom to sell it if necessary.
    • Financial Aspect: While the upfront cost is higher, the total cost of ownership tends to be lower over the item’s lifespan. Upfront payment eliminates ongoing expenses, and potential tax depreciation benefits may arise.

Advantages of Leasing


    • Pros: Leasing offers flexibility by spreading out the cost over regular payments. It allows businesses to avoid saving or borrowing large sums for upfront purchases.
    • Upgrade Options: Leasing provides the flexibility to return or upgrade equipment as needed, accommodating changes in business requirements.
    • Ideal for Obsolescence: If the equipment quickly becomes obsolete, leasing is an attractive option as it facilitates easy upgrades without being tied to outdated assets.

Considering the Numbers

Total Cost Analysis:

  • Evaluate the total cost of ownership versus leasing costs over the expected lifespan of the equipment.
  • Assess the financial implications, factoring in upfront expenses, ongoing payments, and potential resale value.

Flexibility and Investment:

  • Consider the impact on your business’s cash flow and ability to invest in other crucial areas.
  • Weigh the benefits of leasing, such as preserving capital for strategic investments, against the higher overall cost.

Making an Informed Choice

The decision-making process involves a comprehensive analysis of upfront and ongoing costs, aligning them with anticipated economic benefits. Our team can assist you in running the numbers, incorporating cash flow considerations, borrowing costs, and sales projections to guide you towards a decision that aligns with your business goals.

Get in Touch

For any inquiries related to this topic or other matters, feel free to contact our office at 1300 620 345. We are here to provide guidance and support as you navigate the complexities of acquiring new assets for your business.