Leasing equipment can be a game-changer for startups. It provides access to high-quality tools without draining cash reserves. But like any business decision, it comes with its own risks—especially for founders unfamiliar with leasing contracts or vendor negotiations. In this article, we’ll walk through five common leasing mistakes startups make—and how you can avoid them.
1. Not Understanding the Total Cost of the Lease
Startups often focus on the monthly payment—but overlook the total cost over the lease term. When you add up all payments, service fees, maintenance costs, and end-of-lease obligations, the final price may exceed the cost of purchasing the equipment outright.
How to avoid this:
Always calculate the total cost of ownership (TCO) and compare it with both leasing and buying options. Ask the leasing provider for a breakdown of fees and potential penalties.
2. Choosing the Wrong Lease Type
There are different types of leases—operating leases and capital leases (now called finance leases). Each has distinct implications for ownership, taxes, and accounting.
Mistake: Assuming all leases are the same.
How to avoid this:
Understand the structure of each lease type. If your startup plans to return the equipment, an operating lease may be better. If you want to own it, a finance lease could be more appropriate.
3. Not Reading the Fine Print
Many startups rush through lease agreements, skipping over the small print—only to discover later that the contract includes surprise fees, unclear renewal clauses, or rigid return policies.
How to avoid this:
Have someone with financial or legal knowledge review the lease terms before signing. Make sure you understand:
- End-of-lease conditions
- Maintenance responsibilities
- Upgrade options
- Early termination penalties
4. Overcommitting to Long-Term Leases
A long lease might reduce monthly payments—but it can lock your startup into outdated equipment as your needs evolve.
How to avoid this:
Opt for flexibility. Choose shorter terms or negotiate for early exit options and equipment upgrades. Your business will likely pivot as it grows—make sure your lease terms allow for that.
5. Working with the Wrong Leasing Partner
Not all leasing companies are startup-friendly. Some may lack transparency or provide poor service once the contract is signed.
How to avoid this:
Vet your leasing partner. Look for:
- Experience with startups or small businesses
- Clear, upfront communication
- Positive testimonials and reviews
- Flexible terms and good post-sale support
How Fincap Helps You Avoid These Mistakes
At Fincap, we’ve helped hundreds of Canadian startups find the right leasing solutions. Our contracts are transparent, flexible, and designed for growth. Whether you’re leasing machinery, IT equipment, or vehicles, we guide you through each step so you never feel in the dark.
Conclusion
Leasing can offer startups a powerful edge—but only if done right. Avoiding these five common mistakes can save you time, money, and a lot of headaches. Take the time to evaluate your needs, compare options, and choose a leasing partner who understands what it’s like to build something from the ground up.
Let leasing work for your startup—not against it.
