Buying vs. Leasing Commercial HVAC Equipment

leasing commercial hvacAs a commercial property owner, you have a lot on your plate. One of the biggest purchases, aside from the building, is likely to be HVAC equipment. Purchasing commercial HVAC equipment can be overwhelming, but did you know that you have the option to rent or buy this equipment? Cates Heating and Cooling is here to tell you about both options.

When You Should Buy Commercial HVAC Equipment

Buying commercial HVAC equipment will be the best bet for many building owners or those leasing a building. If you are concerned with the total amount of money you are going to pay (not how much you are going to pay upfront), then you will probably be more interested in purchasing HVAC equipment, because you will end up paying less, because leasing often requires interest to be added to the payments.

If you are an established business owner or building owner, the best option, especially if you plan on staying around for a long time, would be to purchase your HVAC equipment outright.

Here are a few benefits to purchasing HVAC equipment:

  • No interest charges or rental premiums
  • Financing plans have shorter, better terms than rental agreements
  • Adds value to the property
  • Allows you to choose the service provider

In most cases, buying a commercial HVAC system will be more beneficial than renting, but if you can’t afford to buy a system, then renting might be the better choice for you.

Brent Taylor, an outsourced CFO and owner of BT Advisors, who advises small and mid-sized businesses, points out that the new tax law provides added incentives for business owners looking to upgrade their HVAC Systems. “The recently enacted Tax Cuts and Jobs Act included a provision to allow HVAC products to be considered Section 179 property, which means that the system can now be deducted in full as a business expense in the year it’s placed into service instead of having to slowly depreciate it over many years.”

Even with these changes, some businesses may still like the aspect of leasing equipment, because it can initially be cheaper with low monthly payments.  In some arrangements maintenance and repairs can also be included under the lease, which means the business owner would be covered in the event that something goes wrong with the unit and it needs to be repaired. If your business is considering upgrading your HVAC system, careful consideration should be made to understand which option is the best for their situation.

When You Should Lease Commercial HVAC Equipment

For some property owners, leasing commercial HVAC equipment makes way more sense than shelling out the money to purchase the equipment. Leasing is a smart decision when your business is in growth mode because funds could be tight, and you might only be in one space for a short amount of time before you outgrow the space.

It is important to remember that you are more likely to pay higher interest rates if you decide to rent HVAC equipment, and you want to be careful with the terms of your lease.

Here are a few benefits to leasing HVAC equipment:

  • Free or discounted labor and repair costs
  • Ability to use more expensive HVAC systems
  • Payments are more manageable
  • Payments are spread out over time
  • Rent-to-own play may be available
  • Contract is transferrable

When you decide to rent HVAC equipment, you will need to do a little research to make sure that you are renting from a reputable company. You will also want to make sure that you understand all of the fees associated with the rental agreement. Compare these fees with financing the purchase of a new HVAC system to make sure that you are truly getting the best deal for you. While there is nothing wrong with renting this type of equipment, you also want to make the best financial decision for you and your business.

Learn more about buying and leasing options from Cates Heating and Cooling by contacting us today at 913-888-4470. We can review your options and help you figure out rental or financing options that will suit all of your needs.