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10-14-2009, 09:29 AM | #1 (permalink) |
Join Date: Oct 13 2009 Location: Texas
Posts: 5
Rep Power: 0 | Who Leases Beds and Pros/Cons of Leasing Who out there leases beds? I'm debating on Leasing 2-3 beds to see how things work out. I just dont want to be stuck with 10K in beds if something doesn't work out. Whats everyones Pros/ Cons of Leaseing beds? I'm considering about a 6 month lease maybe up to a year... |
10-14-2009, 10:58 AM | #2 (permalink) |
Re: Who Leases Beds and Pros/Cons of Leasing The Leases are ussually just a different form of a loan with your personal guarantee. So if they are reposessed you pay with your credit rating. A 6 month lease would mean you are just paying for the beds over 6 months, you could have a reduced payment with a larger amount down and a baloon at the end. Try buying some good used equipment, there are great deals out there now. | |
10-14-2009, 11:18 AM | #3 (permalink) |
Team TanTalk Join Date: Jul 13 2004 Location: Menomonie, Wi. Age: 82
Posts: 3,145
Rep Power: 22 | Re: Who Leases Beds and Pros/Cons of Leasing I don't think you'll find any company that will lease beds for 6 months. A leasing company will only lease equipment if you are an established salon, and have a good track record. Along with that, you will need a personal guarantee with net worth far above what you're going to lease the beds for. |
11-17-2009, 04:17 PM | #4 (permalink) |
Join Date: Feb 9 2005
Posts: 17
Rep Power: 0 | Re: Who Leases Beds and Pros/Cons of Leasing Parrot, while you're right about no one doing just a 6 month lease (at least that I'm aware of. Our minimums are 24 mos, and then as low as 12 on very rare occasions.), money for brand new salons is definitely available. Also, while net worth is important on some transactions, smaller transactions rarely take that into consideration. It's based more on pay history and current debt. |
11-17-2009, 05:38 PM | #5 (permalink) | |
Join Date: Feb 9 2005
Posts: 17
Rep Power: 0 | Re: Who Leases Beds and Pros/Cons of Leasing Quote:
Also, some good forethought & a business plan will help alleviate some of the "if this doesn't work out" pitfalls. Just like you don't want to be stuck, it will be hard for a supplier or bank to sell 6 month old equipment if it doesn't work out for you. This will generally increase your costs in securing a lease with such a short term. There's some basics: 1. Use of Equipment. Leasing is the use of an asset through contracted terms. No business pays it's employee's salary in advance, they pay the employees as they contribute. Is should be no different with a contributing asset like business equipment. Leasing enables you to pay as the equipment contributes. 2. Potential Tax Benefits. Just as businesses have done for years, a lessee can usually deduct their monthly lease payment as an operating expense, like the rent, electric, or phone payments. 3. Fixed Payments. Monthly payments on a lease are generally fixed for the entire term of the lease. This is a distinct advantage in times when many financing transactions have floating interest rates. Knowing in advance what your payments will be enables you to budget and manage equipment dollars for a long time. 4. Extended Terms. Many banks only lend money short term, usually 12 to 36 months. In lease arrangements, the term can be as long as 60 months, and in some cases, even longer. 5. Protection from Obsolescence. Industry analysts say today's equipment could be technologically obsolete much quicker than before due to developmental advances. This is especially true with computers. 6. No Downpayment. Most traditional financing options require a sizable down payment. With equipment purchases, this can be a 20% down payment or more! When you lease the equipment, there is no downpayment! 7. 100% Financing. Traditional methods of financing usually do not include "soft" items such as installation, freight, and training. A good lease transaction includes these, and possibly more, thereby allowing you to finance the total package. 8. Flexibility. Leasing provides the lessee with greater structuring flexibility. This means that we can increase and decrease payments to suit your budgeting cycles as in a seasonal business. Other examples are deferred payments. Banks do not allow for this flexibility. 9. Simpler Than Bank Loans. Leasing programs and procedures are specially designed to take the red tape out of financing capital equipment for businesses. Where a bank will require tax returns to lend money to a business, most Equipment Leases for established businesses can be obtained without them! 10. Purchase or Renewal Options. Most lease arrangements allow customers the option to either purchase the equipment at a stated amount, at Fair Market Value, or to renew the lease at a reduced monthly payment. You can determine which option suits your needs, and set up the structure of your lease to accommodate those needs. 11. Conservation of Capital. Because of the sizable cash outlay involved in purchasing new equipment, many businesses use Equipment Leasing to conserve their capital. Money saved by the business is better used to buy inventory, advertise, hire personnel, or resolve business emergencies, rather than depleting your savings to buy equipment. If you are in a business where you have important alternative uses for money on hand, leasing always wins in the 'Lease vs. Buy' analysis. 12. Easier Cash Flow Forecasting. Leasing, which is simply dollars-per-month financing, helps an equipment user fit a monthly payment into their budget. Because payments are fixed, the user can intelligently budget into the future. 13. Ability to work within Budget Limitations and around Corporate Purchasing Committees. Subsidiaries of large corporations or department managers of small companies have the authority to acquire equipment they need, but only if it fits within operating budget guidelines. Many managers decide to acquire needed equipment via leasing, because it allows them to have the use of the equipment and still work within operating budget limits. Owning it doesn't make the equipment more productive! 14. Special Programs. Marketing and Pricing programs can be customized to reflect the financing needs of specific industries. 15. Master Lease Agreement (MLA). Businesses with multiple locations or divisions can derive benefits from an MLA. This is an agreement between the lessee and lessor as to the terms and conditions under which they will do business. The advantage of agreeing to terms and conditions with a selected lessor, is that on all future installations, the acquisition process is simplified because terms have already been established. 16. State of the Art Equipment. When dollars are already budgeted, managers who need new equipment can conveniently acquire that equipment on a dollars-permonth basis, since the monthly payment precedent has usually already been established. 17. Additional Lines of Credit. When equipment is bought with borrowed funds, credit lines with a lender are reduced. When equipment is leased, a business has in fact, established an additional line of credit with its lessor. 18. Special Advantages for Municipalities. Capital Resource Management has true municipal lease programs that pass of the benefit of the taxexempt status of the lessor's income to the lessee in the form of reduced monthly payments. These programs also include a fiscal funding clause that allows the municipality to cancel the lease contract if funds are not allocated to continue. 19. Use Lessor for other Equipment Needs. While some companies have captive finance companies to handle only their equipment, other lessors are in the position to lease just about anything. If you have the good fortune of selecting a full service vendor/lessor, all your equipment, from photocopiers to forklifts, can be handled by someone that you have already developed a business relationship. 20. Increases your Cash on Hand. Leasing your new machinery and equipment will allow you to preserve your existing cash flow to respond to new business opportunities. The profits generated from the productivity of the equipment ALSO: The vast majority of Commercial Leases are NOT reported to your credit bureau. What this means to you is that your other creditors will NOT take this commercial lease debt into account when making credit decisions for you. ie: if you want credit limits raised on your credit cards, or refinancing a home. Those lenders will NOT see the commercial debt when considering personal credit for you. This is imperative in this economy. The last thing you want is to try to refinance your home to get a lower monthly payment and be declined because you went to the bank for $50,000 in commercial equipment. The lender will simply tell you that they can't extend the better terms to you because the risk is to great with the 'total' debt showing on your credit report. | |
11-17-2009, 05:59 PM | #6 (permalink) |
Join Date: Mar 8 2003 Location: IOWA
Posts: 69
Rep Power: 0 | Re: Who Leases Beds and Pros/Cons of Leasing Have always leased beds. Usually on a 36 mo / $1. b.o. Absolutely love leasing more for the tax benefits as well as not having to go to the bank and beg. My only downfall, is in season when the cash is coming in and wanting to apply extra to lease, doesn't benefit...set number payments. Leasehere, excellent explination btw. |
11-17-2009, 06:52 PM | #7 (permalink) | |
Join Date: Dec 5 2005 Location: Ontario
Posts: 170
Rep Power: 19 | Re: Who Leases Beds and Pros/Cons of Leasing Quote:
If you're thinking of bringing in a bed that you are not experienced with... Buy it outright and avoid attatching yourself to a lien on the equipment. So like you said...if it doesn't work out you can sell it right away and replace it no questions asked. If you have a bed up and running in your salon right now and it's doing so well for you that you would like to add another but would rather lease it and let it pay for itself...then you lease. Either way though...if the funds are available to you... Forget the leasing company. | |
11-17-2009, 09:15 PM | #8 (permalink) |
DERFTALK FBI AGENT Join Date: Jul 29 2003 Location: northeast Age: 48
Posts: 3,632
Rep Power: 46 | Re: Who Leases Beds and Pros/Cons of Leasing id pm memeber sunsally at highline capitol. her real name is Ann. They lease used new and repoed equipment.
__________________ someone PM me when a good tanning topic is posted. :lol: |
11-18-2009, 06:36 AM | #9 (permalink) |
Join Date: Oct 13 2009 Location: Texas
Posts: 5
Rep Power: 0 | Re: Who Leases Beds and Pros/Cons of Leasing Thanks for all the Leasing information... I was fortunate enought and bought all Newer used beds...so I dont even have a note.... Again Thanks for all the information. |
11-18-2009, 07:42 AM | #10 (permalink) |
Team TanTalk Join Date: Jul 13 2004 Location: Menomonie, Wi. Age: 82
Posts: 3,145
Rep Power: 22 | Re: Who Leases Beds and Pros/Cons of Leasing You were smart, in that, you could eliminate another debt by not having to lease or to borrow the money. Now, if the salon doesn't make it, you can simply sell the beds, and not have to worry about someone coming after you to satisfy a personal guarantee which you gave them. Good for you. |
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