For a Lawrenceburg, TN shop, the difference between equipment financing and leasing shows up at the end: with a loan, the shop owns the lift or cooler once the last payment is made; with a lease, the leasing company owns it unless the shop buys it. The full cost over the term, not the payment, decides which is cheaper.
On an invented $14,280 lift, the loan costs less over the term than a $1 buyout lease, and less than a fair market value lease whenever the end price tops $2,314.80; returning a leased lift costs least but leaves no lift. Occasional equipment can be rented, and a leased cooler's end-of-term choice sets its cost per year of use.
Equipment financing vs leasing for a two-post lift at a Lawrence County, TN auto repair shop: who holds title in year six
Of the 22 auto repair and maintenance employer establishments in Lawrence County, TN in 2023, 14 ran with a crew of fewer than five. A two-post vehicle lift is equipment a shop may plan to keep for many years.
That length of use is the point. With an equipment loan, the shop holds title from the start and the funding partner holds a lien until the last payment; in year six the lift belongs to the shop outright. With a fair market value lease, the leasing company holds title through the term; in year six the shop owns the lift only if it chose to buy it.
A term loan can also carry a lift together with other shop costs. The equipment financing page covers loans, finance agreements and leases in general; this post prices one lift three ways.
A fair market value lease, a $1 buyout lease and a loan on the same lift, priced side by side
Illustration only, invented figures: a Lawrence County, TN shop prices a two-post lift, delivered, at $14,280. Three offers on the same lift:
| Option | Monthly payment | Paid over 60 months | At the end |
|---|---|---|---|
| Equipment loan, rate 10.45% a year | $306.58 | $18,394.80 | The shop owns the lift |
| $1 buyout lease | $318.00 | $19,081.00 with the $1 | The shop owns the lift |
| Fair market value lease, returned | $268.00 | $16,080.00 | The lift goes back |
| Fair market value lease, bought at an assumed end value of $2,600 (invented; the real price is set at the end) | $268.00 | $18,680.00 with the buyout | The shop owns the lift |
In this invented case, the loan comes out $686.20 below the $1 buyout lease over the term. The fair market value line holds only if the lift is worth $2,600 at the end; above $2,314.80 it costs more than the loan, below that it costs less. Returning the lift has the smallest total, but the shop then has no lift. The real comparison uses the real quotes, including any fees and the actual end price.
Renting by the job, leasing or financing a stump grinder: landscaping equipment leasing for a Lawrence County, TN crew
Landscaping services had seven employer establishments in the county in 2023, six of them with fewer than five employees. A small crew may need a stump grinder only a handful of days a year, and renting by the day is the third choice next to a lease and a loan.
Illustration only, invented figures: a Lawrence County, TN crew rents a stump grinder at $285 a day. At 11 days a year that is $3,135.00; at 20 days it is $5,700.00. A lease at $274 a month costs $3,288.00 a year. Buying the grinder for $8,350 with a three-year loan at 12.85% a year puts $280.74 on each monthly bill ($3,368.88 a year) and leaves the crew owning it once the 36th payment clears.
In this invented case renting costs least at 11 days, and the loan costs less than renting at 20. The crew's own job log, counting the days it needed the machine last year, is the honest input. A line of credit can cover rental bills as they come in.
End-of-term choices on two leased reach-in coolers at a Lawrenceburg, TN grocery store, priced per year of use
Twelve grocery and convenience store employer establishments (NAICS 4451) operated in the county in 2023. For a store that leases its reach-in coolers, the end of the term is a second decision with its own price.
Illustration only, invented figures: a grocery store leases two three-door reach-in coolers at $389 a month for 36 months, $14,004.00 in payments. What the coolers cost per year of use depends on what the store does at the end:
- Return them: an invented $350 pickup charge brings the total to $14,354.00 for three years of use, or $4,784.67 a year.
- Buy them at an invented end price of $1,850 and keep them eight years in all: $15,854.00, or $1,981.75 a year.
- Miss the notice window on a lease that renews on its own: three more months at the invented $389 add $1,167.00 before any choice is made.
The end price, any pickup or condition charges and the notice window are set in the lease itself, and so are upkeep and insurance during the term, so the time to read them is before signing. More posts are on the blog.
By Wrenway Funding · Updated
