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To Lease or not to Lease

Discussion in 'Miscellaneous Print & Cut Systems' started by Mailmom, Mar 17, 2007.

  1. Mailmom

    Mailmom New Member

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    Mar 15, 2007
    Joseph, UT
    I found that I can lease a Summa instead of purchase. Probably true of some other brands also.
    I also found several used printer/cutters out there, ebay etc..
    But reading on this site I am wary of used, especially since I am really no mechanical engineer.
    What are your opinions of leasing instead of purchasing? One positive is that you don't have to try to sell it and you can get the new technology as you turn it.
    Let me have it!:help:
     
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  2. Fred Weiss

    Fred Weiss Merchant Member

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    It just depends on how you feel about debt and accepting a financing plan rather than buying outright. Nearly every equipment purchase I have made since beginning in 1983 has been with a lease-purchase arrangement.

    The upside is you can pay for the purchase out of the profits frm the work it produces. The downside is that if you are wrong and the equipment doesn't earn enough profits for you, you are still obligated for the sum of the lease payments and cannot prepay your lease early at any savings from the total obligation of the lease. The result is that on most leases you will owe more (be upside down) on the lease for about the first 80% of its term than the equipment would bring if you sold it as used equipment.

    The other issue is what happens at the end of the lease. There are usually three different options which you choose at the onset. Each option effects what your monthly lease payment will be.

    • The equipment goes back to the lessor at the end of the term of the lease.
    • The equipment either goes back to the lessor or you can buy it for either a percentage of the original value or "fair market value".
    • The equipment either goes back to the lessor or you can buy it for $1.00.
    For example, I own a Gerber Edge and Envision plotter which I acquired new in 1999 by entering into a 60 month lease-purchase plan through my bank. It never failed after the first two months to generate more profits than the cost of the monthly payment. At the end of the lease, for $1.00 it was mine. Now, almost three years without a monthly payment, the equipment continues to generate enough profits to cover my overhead and pay me a living income.

    My point is that changes in the technology do not necessarily mean that a tool or a piece of equipment should be discarded. If it was good enough to acquire in the first place and is running okay and your customers will still buy what comes out of it, why would you want to let it go and go back into debt?

    Lease-purchase agreements, IMHO, are best suited as forms of alternative financing ... not as a long term rental agreement in which you never build equity or end up owning the equipment.
     
  3. Billct2

    Billct2 Major Contributor

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    I've leased to won ($1 buyout) a Gerber Edge, HP 500 and now a Summa DC4.
    It's worked well for me.
     
  4. PGSigns

    PGSigns Active Member

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    I have mine leased through Summa with the 10% buyout at the end. If I want to keep it it is not much to buy it out and if I want to go a differant direction with my shop the payments were a little lower during the lease period. And the folks Summa use for there lease program are very easy to work with.
    Jimmy
     
  5. Mailmom

    Mailmom New Member

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    Mar 15, 2007
    Joseph, UT
    Thanks for the sound advise and experiences. I have been looking at some used machines also, but am kind of leary of buying someone else's problems. Then also I have noticed they seldom come with software included. They must keep their software for their new hardware.
    Any advice of purchasing used?
     
  6. Fred Weiss

    Fred Weiss Merchant Member

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    Olympia, WA
    My rule of thumb is that if you're not an old hand with this or similar hardware and software, then you should buy new and buy the dealer ... not the equipment. You're investing in equipment and software that is designed to return you thousands of dollars a month in profits. Part of getting that to be a reality in short order is a good dealer to help you select a setup, install it, train you and then be there for support. That might cost you a couple of thousand extra but if it gets you up to speed two weeks to a month sooner, then you're money ahead.
     
  7. ChicagoGraphics

    ChicagoGraphics Major Contributor

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    Your best bet would be to get a loan or a line of credit from your bank, It is much cheaper then a lease, and there is allways extra $$$ in your account in case of an emergency. I myself would never buy a cutter or printer off of e-bay. If your looking to buy use buy a demo machine from a dealer, at least there you will get at least a 1 year warninty and most often come with some extras.
     
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