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Old 10-14-2009, 09:29 AM   #1 (permalink)
 
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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...
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Old 10-14-2009, 10:58 AM   #2 (permalink)
 
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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.
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Old 10-14-2009, 11:18 AM   #3 (permalink)
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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.
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Old 11-17-2009, 04:17 PM   #4 (permalink)
 
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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.
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Old 11-17-2009, 05:38 PM   #5 (permalink)
 
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Re: Who Leases Beds and Pros/Cons of Leasing

Quote:
Originally Posted by TikiTans15 View Post
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.
It sounds like you want a short term rental. You'll have better luck calling a supplier that will work our a custom arrangement with you.

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.



Quote:
Originally Posted by TikiTans15 View Post
Whats everyones Pros/ Cons of Leaseing beds?
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.
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Old 11-17-2009, 05:59 PM   #6 (permalink)
 
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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.
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Old 11-17-2009, 06:52 PM   #7 (permalink)
 
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Re: Who Leases Beds and Pros/Cons of Leasing

Quote:
Originally Posted by TikiTans15 View Post
I just dont want to be stuck with 10K in beds if something doesn't work out.
You just answered your own question...

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.
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Old 11-17-2009, 09:15 PM   #8 (permalink)
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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.
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Old 11-18-2009, 06:36 AM   #9 (permalink)
 
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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.
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Old 11-18-2009, 07:42 AM   #10 (permalink)
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Re: Who Leases Beds and Pros/Cons of Leasing

Quote:
Originally Posted by TikiTans15 View Post
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.
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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