29 Apr Leasing Medical Equipment – Pros & Cons
The world of medicine has witnessed a massive transformation due to technological advances.
This revolution accompanies the introduction of new medical equipment that provides increased effectiveness.
If you do not have access to the latest medical equipment, you cannot give your patients the treatment they expect – or at a cost the makes you relevant.
However, many new medical practices cannot afford to buy all the necessary equipment in one go. So, how do you maintain quality care without compromising on your budget?
Leasing is one answer.
Medical equipment leasing is not uncommon. Many practices choose to lease the necessary medical equipment to remain within their stipulated budget.
CHATTEL MORTGAGE
The asset belongs to you from the beginning, and the lender has a ‘charge’ over the asset that secures the loan until the final payment has been made.
Because the borrower holds title to the goods, there may be taxation benefits.
So, it’s important to get the right advice from an appropriate professional adviser, such as an accountant, or a commercial finance broker as to whether this finance would work for you and your business.
FINANCE LEASE
The lender (lessor) purchases the equipment outright. The borrower (lessee) gets to use the equipment for the term of the lease in return for lease/rental payments.
Under a finance lease, the borrower (lessee) traditionally doesn’t need to outlay any working capital and may also be eligible to claim a tax deduction.
You should consult your tax adviser about potential tax deductions when considering a finance lease.
Here are some of the advantages and disadvantages of choosing a Finance Lease to acquire medical equipment instead of buying:
ADVANTAGES OF LEASING MEDICAL EQUIPMENT
1 Cost Effectiveness
The most apparent benefit of leasing equipment is the reduction in costs that you would incur otherwise.
There is no need to make a down payment, and the recurring payments are affordable. Moreover, you can work on improving your credit score while leasing and then apply for a loan when you feel you are ready.
2 Fixed Expenses
You will be liable to pay a fixed amount every month, as decided at the beginning.
Therefore, you will know exactly how much you have to pay, and there will be no surprises.
Even if inflation does pick up, your payment will remain the same.
3 No Maintenance Costs
When you lease equipment, the maintenance expense falls under the responsibility of the owner.
However, you will need to clarify who will pay for the repairs and maintenance at the beginning of the contract.
If you choose to buy medical equipment, you will see the maintenance expenses can sometimes be significant.
4 Rapid Upgradation
Keeping your equipment updated and upgraded tends to be costly for owners.
On the other hand, when you are leasing, you can get access to the latest in the field of medicine. Your ability to use only the best and latest medical equipment gives rise to trust in the minds of your patients.
DISADVANTAGES OF LEASING MEDICAL EQUIPMENT
1 Recurring Costs
If you choose to lease medical equipment, you must pay the fixed amount as soon as it is due.
This means that you will be liable to pay the amount even during the times you do not use the equipment.
While cancelling your lease is an option, it can be costly due to the termination fee that applies.
To avoid getting stuck in such a situation, it is recommended to sign a short-term lease. Of course, your monthly payments will be higher.
2 Lack of Ownership
While leasing has many benefits, you never own your medical equipment. The lessor holds the ownership, and you can not include the equipment in your capital assets.
You can agree to enter a lease-to-buy deal and purchase the equipment at the end of the lease term.
In conclusion, leasing has opened up numerous opportunities for medical practices that wish to remain competitive.
Without incorporating the latest technology, medical facilities cannot expect to grow and prosper.
The advantages of leasing medical equipment far outweigh the disadvantages, thereby making it an attractive investment.