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Equipment Leases
- Thread starter hatmanok
- Start date
Haakon
New Member
Comparing leasing(renting) production equipment to renting a trailerhome, a couch or a TV shows how little you understand the concept here.
If you have $0 to start with, and have to save up for x amount of months or years to be able to purchase production equipment with cash, in the same months and years you could have made money on that same equipment, much more than the premium you pay for leasing it.
A couch or a TV is for your leisure and entertainment, and you only lose money on it, either it is paid for cash in advance, financed by a loan or any other payment solution.
A Printer/laminator setup (to use an example) makes you money in a production setting. If you are in a situation that you sell enough prints to necessitate having a printer, you will otherwise spend a lot more money subbing it all out, than the premium on a lease.
If you pay $700 a month on a lease for a printer, and that printer gives to $2000 a month in added income, it's far better solution than having $0 in expenses and making $0 extra each month, for the time you need to save up for that $30,000 printer.
If you have $0 to start with, and have to save up for x amount of months or years to be able to purchase production equipment with cash, in the same months and years you could have made money on that same equipment, much more than the premium you pay for leasing it.
A couch or a TV is for your leisure and entertainment, and you only lose money on it, either it is paid for cash in advance, financed by a loan or any other payment solution.
A Printer/laminator setup (to use an example) makes you money in a production setting. If you are in a situation that you sell enough prints to necessitate having a printer, you will otherwise spend a lot more money subbing it all out, than the premium on a lease.
If you pay $700 a month on a lease for a printer, and that printer gives to $2000 a month in added income, it's far better solution than having $0 in expenses and making $0 extra each month, for the time you need to save up for that $30,000 printer.
klingsdesigns
New Member
This is my first one and it has helped me a ton. Otherwise I would just have a plotter and t-shirt press. If I did have the money I would buy outright. And I would have a shop instead of working out of my house. 
Kentucky Wraps
Kentucky Wraps
Mosh,
Renting is not exactly the same as leasing. There are shifts on liability and there are Lot's of situations where LEASING makes way more sense than Purchasing equipment. Technology changes every few years. Economy can shift. You may have a short term project that you can make more money by printing in house but lack the printer resources to do it. It's not always best to be stuck with outdated equipment that doesn't hold equity...as technology changes.
The notion that ALL DEBT is bad doesn't apply across the board in the business world where Cash Flow has so much power.
We aren't talking about a house(equity)...we're talking about Income Generating Tools (active capital) where the money is NOT in it's equity but in it's ability to generate cash flow. Most equipment doesn't gain equity as you pay it off, it becomes more obsolete and actually loses value, unlike Real Estate. So the notions of ownership of property aren't the same with different types of property.
Trust me, it's naive to take your position when so many Multi-millionaires would beg to differ with you.
mark galoob
New Member
i have leased equipment, and i have outright purchased equipment. i have a new printer im looking at and this time im going to finance it with a bank loan. i think that is best going to be the best solution. in that situation, i can leverage the banks money, when i am done paying it off i own it, and no penalty for early payment. also banks are far easier to deal with than leasing company.
i have to agree w/ mosh about the leasing company's, they are to be avoided at all costs.
but i also see the value in using someone elses money to enrich your own cash flow.
cash is king, cash flow is how a king stays a king...
i have to agree w/ mosh about the leasing company's, they are to be avoided at all costs.
but i also see the value in using someone elses money to enrich your own cash flow.
cash is king, cash flow is how a king stays a king...
xkellyx
New Member
We have done both. I appreciate being able to deduct the lease as an operating expense. For some large purchases it has made sense for us to lease. The way I see it is, we keep our cash flow liquid, and have a predictable expense every month. We would never borrow more than we could pay per month, even a bad month. The interest we pay the lease company is a convenience fee. It enables us to make money we otherwise would not be making. With a dollar buy out at the end of 2-3 years we own the equipment and have been making money the entire span of the lease. had we not leased, we never would have been making that extra money. So, in he end, leasing has become rather profitable for us.
coastguy111
New Member
Tax incentive 179 - I highly suggest everyone looking into it.
Leasing
I have always leased. It has worked well for me and it has gotten my company to where it is today. I only had $1000.00 to my name when I started with a 12" sign warehouse cutter and that was 16 years ago. Toady, we run a Roland XR-640 printer, 4x8 CNC Router, 60" Laminator, and Roland 42" Cutter ETC. The tax savings were immense and have been a great way to keep cash flow. So, find yourself a good lease company and don't look back. If you want it bad enough and work hard enough you will achieve your goal. At the end of the day, you have to do whats right for you and your business.
I have always leased. It has worked well for me and it has gotten my company to where it is today. I only had $1000.00 to my name when I started with a 12" sign warehouse cutter and that was 16 years ago. Toady, we run a Roland XR-640 printer, 4x8 CNC Router, 60" Laminator, and Roland 42" Cutter ETC. The tax savings were immense and have been a great way to keep cash flow. So, find yourself a good lease company and don't look back. If you want it bad enough and work hard enough you will achieve your goal. At the end of the day, you have to do whats right for you and your business.
signbrad
New Member
Have you talked to your accountant?
I believe that the most valuable person you can have on your team is an accountant. An accountant is well worth the money you pay him or her for their service. They can give you the best information regarding lease/buy decisions. Our opinions are based on our own personal circumstances, and don't necessarily apply to everyone else. An accountant is trained to think smart financially, and can give unbiased advice without the emotional or political baggage that can come with advice from our peers.
Leasing is not exactly renting. But even so, is renting a bad word? I rent my apartment. Is it throwing money away? Hardly. It's paying for a place to live, even if I can't buy it for a dollar when the lease is up. Most of the world rents. (I know that owning property is the American Dream. But it doesn't interest me these days). I don't mow grass. I don't even own a lawn mower. I don't sharpen lawn mower blades or buy lawn mower gasoline or pay for a lawn mower maintenance agreement for when it breaks. And I don't need to set aside time to mow, though sometimes I will sit and watch the lawn service mow. I don't fix plumbing problems. When my microwave and dishwasher broke, they were replaced with new ones. I do own my vehicle, but for as little as I drive it, I could let it go. I walk to work, and when I go to the library or to a concert downtown, I ride the bus for a buck and I don't fight traffic or worry about parking. And I can read while I ride.
My significant other wants us to move to Italy for a while, but she's saddled with a property that she will have to unload before she's free, and she doesn't think she will get her money back out of it. Getting the place ready to sell seems an almost insurmountable task for her. But we'll get there. Meanwhile, I'm ready to go—right now.
I leased my first plotter and software. It worked out great. The vendor arranged everything. I made a lot of money with that 20-inch machine. But everyone's circumstance is different. And I would say that most of you here are probably smarter than I am about money. That's why my accountant was my 'best friend' when I was in business. My second best adviser was my banker. I quickly learned to not make any major decisions without consulting either of them.
Good luck,
Brad in Kansas City
I believe that the most valuable person you can have on your team is an accountant. An accountant is well worth the money you pay him or her for their service. They can give you the best information regarding lease/buy decisions. Our opinions are based on our own personal circumstances, and don't necessarily apply to everyone else. An accountant is trained to think smart financially, and can give unbiased advice without the emotional or political baggage that can come with advice from our peers.
Leasing is not exactly renting. But even so, is renting a bad word? I rent my apartment. Is it throwing money away? Hardly. It's paying for a place to live, even if I can't buy it for a dollar when the lease is up. Most of the world rents. (I know that owning property is the American Dream. But it doesn't interest me these days). I don't mow grass. I don't even own a lawn mower. I don't sharpen lawn mower blades or buy lawn mower gasoline or pay for a lawn mower maintenance agreement for when it breaks. And I don't need to set aside time to mow, though sometimes I will sit and watch the lawn service mow. I don't fix plumbing problems. When my microwave and dishwasher broke, they were replaced with new ones. I do own my vehicle, but for as little as I drive it, I could let it go. I walk to work, and when I go to the library or to a concert downtown, I ride the bus for a buck and I don't fight traffic or worry about parking. And I can read while I ride.
My significant other wants us to move to Italy for a while, but she's saddled with a property that she will have to unload before she's free, and she doesn't think she will get her money back out of it. Getting the place ready to sell seems an almost insurmountable task for her. But we'll get there. Meanwhile, I'm ready to go—right now.
I leased my first plotter and software. It worked out great. The vendor arranged everything. I made a lot of money with that 20-inch machine. But everyone's circumstance is different. And I would say that most of you here are probably smarter than I am about money. That's why my accountant was my 'best friend' when I was in business. My second best adviser was my banker. I quickly learned to not make any major decisions without consulting either of them.
Good luck,
Brad in Kansas City
greysquirrel
New Member
Why not lease through Roland?
David Wright
New Member
Brad's comment is spot on.
There is no cut and dried answer to this but one has to look at all the details personal and business.
To say leasing or renting is bad, many of the world's wealthiest people and their businesses would say otherwise. Heck, most franchises at least lease their properties.
Peter Schiff, who is a pretty savvy financial guy has something to say on renting ( I know, a bit off topic.)
http://peterschiffblog.blogspot.com/2009/03/buy-house-or-rent-one.html
There is no cut and dried answer to this but one has to look at all the details personal and business.
To say leasing or renting is bad, many of the world's wealthiest people and their businesses would say otherwise. Heck, most franchises at least lease their properties.
Peter Schiff, who is a pretty savvy financial guy has something to say on renting ( I know, a bit off topic.)
http://peterschiffblog.blogspot.com/2009/03/buy-house-or-rent-one.html
ProColorGraphics
New Member
I have done both. I guess it depends on the rates. I have purchased the last several times since my local bank gave me a WAY better rate than the leasing company. To the tune of saving over $100 per month! I would also agree that talking to your accountant is your best bet.
coastguy111
New Member
Do you think the term leasing is used for tax incentive reasons... meaning if someone where to lease equipment with the $1.00 buyout to own it then essentially its more of a rent to own scenario with some interest paid as well..
Using a car for example.... someone leases a vehicle (ex-$20,000 car) for 60 months with an interest rate of 5%. Also no pre-payment penalty. But rather then turning the vehicle in at the 60 month mark they just pay $1.00 to the dealership and now they own the vehicle outright.
Im probably making the issue more complicated.. lol
Using a car for example.... someone leases a vehicle (ex-$20,000 car) for 60 months with an interest rate of 5%. Also no pre-payment penalty. But rather then turning the vehicle in at the 60 month mark they just pay $1.00 to the dealership and now they own the vehicle outright.
Im probably making the issue more complicated.. lol