Whether you are upgrading your equipment or looking for the best equipment deals to open your café, many people are surprised to find the number of options open to them. Here we take you through renting, leasing and buying outright and their advantages and disadvantages.
This option is often most popular with people opening a coffee shop. This is when you pay a monthly fee for the use of the espresso machine, but you never own it.
The advantages of this option are more flexibility; you can rent a particular model for a short period of time and assess whether it works well for you and accessibility; there are generally no big deposits to pay or commitments. Maintenance of the machine is also often included in the rental deal.
The main disadvantage of renting is that at the end of your rental period, you do not have the opportunity to buy the coffee machine, and it must be returned to the provider. This solution is not the most profitable in the long run, as continuous renting over a period of many years can work out to be the more expensive option.
This option is when you pay a deposit upfront and monthly instalments to pay off the cost of the machine. At the end of the agreement the equipment belongs to you.
The main advantage of leasing is having new equipment, when you need it, and spreading the cost. There are also tax benefits, as it is not an asset owned by you, so it is tax-exempt. If you are VAT registered, you can also reclaim VAT on the agreed monthly repayments. The extra money saved can be used to reinvest in other areas of your business.
Similarly to renting, a disadvantage of having a leasing agreement may be that it is more expensive in the long-term, compared to buying the machine outright. You may also be required to pay penalty fees if you want to terminate the contract earlier than the agreed end date.
Purchasing your coffee machine means you pay one lump sum upfront, and then you own the machine.
The advantages of buying your coffee machine outright include being in complete control of what model you want to buy, as you are not restricted to choosing within the range that have the rental and leasing options. There is also less paperwork involved as you are not required to go through any financial checks, and there are no contractual obligations. Many machines also come with a warranty if you purchase them outright.
One disadvantage is that maintenance and servicing is not part of the package. Should your new machine breakdown or have any faults, after the guarantee period, you may potentially have to pay to get it fixed and for any required consistent maintenance.
We hope this guide has helped you with your decision, it’s worth noting that at Verde we also offer a low start lease, with lower initial payments, a free on loan option, where you agree to buy our coffee every month and get the equipment for free, and a short term rental, for events. We’d be happy to talk you through the options, just get in touch with one of the team.