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What’s the difference between equipment lending and equipment leasing?

Updated: Feb 12

Do you know the difference between equipment lending and equipment leasing? The main point to take from this is, equipment leasing is a type of equipment financing. Continue reading this article to find out more.

What are equipment loans?

Equipment loans are defined as a sum of money borrowed for the purpose of acquiring equipment to help your business grow. Repayments are made at regular intervals until the entire amount is paid off, at which point you then own the equipment.

Since they’re often unsecured, much of the time equipment loans don’t require you to provide any collateral up front to be approved. Instead, the equipment itself acts as the collateral – so if you take an equipment loan, purchase a piece of equipment, and then fail to repay the lender, then the equipment you purchased may be seized by the loan provider.

What is equipment leasing?

Equipment leasing is a completely different breed of equipment financing. As opposed to borrowing a sum of money that is used to buy a piece of equipment, equipment leasing is essentially an agreement to rent the equipment.

That means regularly scheduled payments that, unliked equipment loans, don’t contribute to your eventual ownership of the equipment. A lender buys the equipment and then rents it out to you, and oftentimes will allow you to purchase the equipment at its market value when the lease ends.

Main points:

- Equipment loans mean you’re buying the equipment

- Equipment leasing means you’re renting the equipment

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