Choosing the Right Purchase Option
What are the various options available when you wish to acquire material handling equipment? The investment required is quite large, and so, requires a fair amount of deliberation. There are three ways you can go about this:
- Buy - the equipment outright. This is feasible if you have strategic plans for your business and have the future mapped out. This option will work well for organizations that are already successful and are looking to expand operations. You can also save on taxes by writing off the depreciation value of the equipment.
- Rent - the equipment on a monthly or semi-annual basis. This alternative is a good choice if you are uncertain about the direction of your business, and may wind up operations at any given time.
- Lease - the equipment for a certain period of time. The two most popular leases for material handling equipment are Capital Leases - A capital lease is similar to a mortgage in that the
equipment becomes the property of the customer at the end of the lease
period, and, Operating Leases - An operating lease is similar to renting the equipment __ you will have to pay a fixed amount as usage charges for a certain period of time after which the customer has three options:
- Return the equipment to the supplier
- Buy it at the current market rate
- Renew the lease
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