4 min read · Equipment
The answer first. Most owners know exactly which machine they need. What decides the real cost is how they pay for it. The lowest monthly payment is often not the cheapest way to get the machine.
Where the mistakes happen
They happen at the dealer's desk. One payment is offered, the paperwork is ready, and the big questions get answered for you. These are the ones that cost owners money.
- ◆Choosing by the monthly payment alone. A lower lease payment can cost more in total if you keep the machine.
- ◆Leasing at fair market value something you will keep for a decade. You pay the lease, then pay again to own it.
- ◆Treating the dealer's financing as the only offer. One offer is not a comparison.
- ◆Counting on a tax deduction without checking. Whether you can use it depends on the business and the year.
- ◆Stretching the term past the machine's working life. Paying for a machine that no longer works is the worst payment there is.
Match the way you pay to the way you will use it
Ask one question first: how long will this machine do useful work for me?
- ◆Keep it most of its working life? Owning usually fits: a loan, or a lease you buy out at the end.
- ◆Hand it back or upgrade in a few years? A fair-market lease can fit.
- ◆Not sure? Compare both, in total cost and in after-tax cost.
Taxes change the answer
Equipment can carry a tax deduction that lowers what it costs the business. We are not tax advisers, so we will not quote you a number. Ask your CPA before you pick a structure, not in April. The right answer depends on what the business earns and when the machine goes into service.
What the lender looks at
An equipment lender asks two questions. Is the machine good security for the loan? And does the business earn enough to make the payment?
- ◆A written quote with make, model, price and whether it is new or used.
- ◆The last three months of business bank statements, with steady deposits.
- ◆How long the machine will work, because the term follows its working life.
- ◆Time in business and the owner's credit.
- ◆Existing debts, listed with their payments.
Walk in with your own number
- 1
Get the written quote
Before you talk payments.
- 2
Price the loan and the lease
Payment, cash in, and total cost for each.
- 3
Ask your CPA about the tax side
One short conversation, before you sign.
- 4
Then compare the dealer's offer
If it is the better one, take it.
The plain version
Know your own number before the dealer gives you theirs. Match how you pay to how long you will keep the machine, and check the tax side with your CPA. We are a broker, not a lender. The lender decides, and we cannot promise an amount, rate or timeline.
Run the numbers
Free, no credit pull, no obligation. See the math before you talk to anyone.