Should You Purchase Up-Front, Purchase Through a Loan, or Lease Your Office Furniture?
Date: October 16, 2018
Category: Featured Trend

When it comes to furnishing a workspace, spending wisely is vital. Providing a comfortable and productive office has to be balanced with the cost of doing so. Depending on your needs, the price of buying office furniture up-front can range from reasonable to restrictive. Fortunately, purchasing through a loan or leasing your equipment affords a level of flexibility that allows you to spend as it best fits your business. Environments Denver offers opportunities to buy up-front, procure furniture through a loan, or lease; and we provide the information you need to make that decision. Here is a comparison of all three options.

Buying Office Furniture Up-Front

The Benefits:

Buying up-front is the simplest option. There are no contracts binding you to monthly payments alongside insurance and interest fees. Since you own the equipment outright, you have more flexibility should you decide you no longer need the furniture. In this case, you build equity, and you’re free to sell the equipment and recoup some of the purchasing cost. Furthermore, deductions under section 179 of the tax code on purchased equipment are straightforward and immediate for the current tax year.

The Potential Pitfalls:

The initial cost can be prohibitive, particularly if you’re furnishing a large workspace or want to keep up with trends of technologically sophisticated furniture. If any of this equipment needs repairs or routine maintenance, you’re saddled with the cost. On top of this, should you decide to upgrade the products entirely, you’ll be faced with another up-front purchase cost. If this upgrade entails an entire workspace, the capital required can really add up. Further, if you’re trying to build business credit through recurring payments, buying up-front won’t allow for that opportunity.

When Buying Up-Front Makes the Most Sense:

For office furniture that doesn’t deplete your capital and won’t require extensive repairs or upgrades, you can buy with the ease of knowing that the product won’t cost much after purchase, and will fit your workspace for a long time.

Buying Office Furniture through a Loan

The Benefits:

Buying furniture through a loan agreement gives you leeway if you want to own the equipment, but don’t want to purchase in one lump sum. Down payments are low or nonexistent; interest rates are lower than leases; and you can build credit through recurring payments. When the loan has been paid through, you own the furniture without having to provide any kind of balloon payment. A loan offers many of the benefits of owning your furniture, with the financial flexibility of leasing.

The Potential Pitfalls:

The tax savings under section 179 aren’t as extensive as a lease, and banks will recapture your furniture if you happen to default on the payments. Though the interest payments are lower than a lease, the interest still accrues, costing you more in the long run than an up-front purchase.

When Buying Through a Loan Makes the Most Sense:

For office furniture that you want to own for a long period of time, but don’t want to purchase all at once, you can utilize a loan agreement that will give you the flexibility to pay at a gradual pace.

Leasing Office Furniture

The Benefits:

Leasing gives you more financial and technological flexibility. Monthly leasing payments remove the risk of high up-front costs and allow you to build business credit over time. If you like keeping your workspace up to date with the ever-evolving office trends, many leasing agreements offer upgrade options at a much lower cost than what you’d pay to buy the new equipment. Furthermore, you can usually fully deduct lease payments under section 179, helping to offset the monthly cost in your agreement. Should your equipment ever need repair during the agreement, it costs nothing for you.

The Potential Pitfalls:

Lengthy leasing agreements can often end up costing more than buying up-front or through a loan, via insurance fees and the highest interest rates. Should you decide that you no longer need your rental furniture, you often have to wait for the agreement to terminate or settle for cancellation fees. Should you decide that you’d like to keep the equipment at the end of the lease, residual or balloon payments will usually be collected.

When Leasing Makes the Most Sense:

For office furniture that needs regular maintenance or will likely be upgraded as your technology and workspace requirements evolve, you can lease without tying up your capital in expensive up-front costs.

The decision to buy up-front, purchase through a loan, or lease your office furniture is an important part of any business plan. Environments offers all three options, and can help you manage the entire process with confidence. Whatever your needs, our wide range of services will keep you covered. We’d love to help, so contact us today.