Lease or purchase question.

[Jim Hill]

What benfits are there to a lease other then you are not using your own money?

I find myself not sure if I want to lease a new Roland or just purchase it and I would like to hear from others who have found themselves in the same position.

I have spoken to my Roland dealer and they have given me a number but it hard to know if this number is a good number or what.

I understand how important service is and there are only two Roland dealers in my state so my choices the way I see it are between these two dealers.

My question is if you do not buy the printer from a local dealer how hard it it to find someone to service the printer?

I did mention to my local Roland dealer that I saw another price for the printer but it was from another dealer in other state and he looked at me and said remember you will need service someday and if it you did not buy it from us......... Well you kind of get the idea that getting it serviced might be hard down the road.

Lease or purchase?

Jim

 

[Bigdawg]

I think right now cash is king and you can probably make a good deal somewhere if you buy outright.

Which part of the state are you in?

 

[iSign]

a lease can be depreciated over time, in a variety of scenarios in terms of how much per year, over how many years... I'm no expert, but I think a cash purchase may limit the manner in which you depreciate it. If you finance it over time, but strictly as a purchase, and not a lease... I think that also somewhat changes your depreciation options.

Although you would need (want) to check with your accountant, an example of what I'm getting at is that if you business was not profitable in 2009, then you won't have much taxes to pay & won't need deductions... if you have one equipment acquisition option that forces you to use a portion of your overall depreciation (tax deduction) opportunities in 2009... and you don't need any more deductions... then next year could be a booming year & you'll pay more tax, then if an alternate equipment acquisition scenario allowed you to save those deductions to apply in the years you benefit most from applying them.

something like that anyway

 

[OCsteve]

We get hounded on a weekly basis from leasing companies that are dieing to set up a lease for equipment. Banks don't seem as anxious to lend money these days. As far as the depreciation question it depends on whether or not you are doing a $1 buyout which is typical. You will own the equipment at the end of the lease for $1. This makes it a capital lease and you treat this the same way you treat a purchase for depreciation purposes. The question should ask yourself is what will be your total cost if you lease or finance at the bank. Find out what you need to pay upfront and what your monthly payments would be under both options. This will determine the best way to go.
It's a totally different story if you have the cash to purchase outright. Depreciation will be the same but you have no interest costs.
Section 179 write-off in the year of purchase is an election. You can elect to depreciate over future years.

 

[JimJenson]

Buying vs. Leasing

For small businesses needing to finance equipment, what's the best option -- a loan or a lease? It usually depends on the business' unique situation, but there are four key factors that should drive the decision-making process: length of ownership, cash flow, ability to obtain financing and tax advantages.

Length of Ownership
In most cases, a loan is the best fit if the business is looking for long-term ownership, which we classify as seven years or more. The equipment would be considered an asset and offer equity value.

On the flip side, a lease is a better fit if the equipment is for short-term use, which we classify as three years or less. This is often the case with technology equipment, that has the potential to depreciate rapidly, or for equipment needed on a project-basis. A lease provides the ability to upgrade equipment easily to meet your changing needs.

Cash Flow
But what if you don't know how long the equipment will be in place? What if the useful life of the equipment falls between three and seven years? In these situations, the next three factors should be stronger driving forces.

The first step is to determine why you're financing the equipment. If you view the finance agreement as a short-term solution and want the ability to pay the equipment off early, a loan is clearly the best option.

But, if cash flow is tight, a lease may be a better solution (even if long-term ownership is the intent). With an equipment lease, there is no down payment, and soft costs -- such as installation and training -- may be rolled into the finance agreement. You'll have immediate access to the equipment with little-up front investment, thereby freeing up cash for other expenses and investment.

Ability to Obtain Financing
If you need financing for other reasons, you may have difficulty obtaining a loan for your new equipment. In that case, leasing can get you the equipment you need, and it doesn't restrict your ability to borrow additional funds because leased equipment doesn't have to show up on your balance sheet.

Tax Advantages*
Tax advantages can also drive the decision to finance equipment through either a loan or lease. With both loan and capital leases, the equipment is depreciated as an asset. With all other lease options, up to 100% of the lease payment can be deducted pre-tax. For complete details and direction, consult a tax advisor.

 

[sam gha]

I lease Roland, it's better to lease than purchase at least now, I believe that cash will make a different but i prerfer to keep the money and lease.


I purchase 2 other machine pay for it I regret that I wish that I lease it . machine pay itself, trust me .

 

[Mosh]

If you lease you are paying them every month, then at the end of the lease you can pay them MORE money or give the printer back. Kinda like paying rent, pay pay pay and never own it outright. If you have the cash, or a way to get it buying (IMO) is the smartest thing to do.

 

[JimJenson]

The idea of a lease is that you pay the depreciation for the duration of time of the lease. At the end of that time, you have the option to purchase the remaining equity in the leased item, or not.

Dollar buyout or 10% buyouts, are leases in name only.

 

[FrankenSigns.biz]

It has been my experience that leased equipment tends to obsolesce before the lease is up. On more than on occasion I have found myself paying for equipment I can no longer use. Due to this fact, though I have acquired several printers in the last 4-5 years, I have leased only one in that period. Leases can have a positive effect on your federal return.

So, I'd say talk to your accountant and keep your lease term under 4 years.

 

[Jim Hill]

Thanks to everyone for the great advice.

I sure got some very good advice on what to do as far as a lease or purchase.

One problem with either leasing or just making a purchase is the minute the printers leaves the dealer headed for my shop is the hit you take on what it's now worth. A friend of mine who has bought many printers told me do not buy a new unit.

One of the question I asked when I posted my questions was how easy is it to get service on a printer if I purchase it from someone other then my local Roland dealer?

Anyone else purchase a printer and then need service from a local dealer?

I mean does the service call charge then go through the roof if you did not get it from them?

In a way they have a captive market because we all know at some point you will need a tech to come for something and I am just wondering if there are two different rates depending on where you made your purchase.

Am I wrong to think this way?

Thanks Jim

 

[FrankenSigns.biz]

I will say emphatically you are NOT wrong this think that way.

 

[Mosh]

We have a property we leased to a restaurant, we offered to sell it to them, but they wanted to lease. Guess what, they paid us more in a 10 year lease than if they would have just bought the place. Now they have closed up, and guess what, we still own the property after all those lease payments. Leases are for people with NO credit, or who are in it for a short term.