How did you purchase your machine?

[Jay Selway]

Did you buy it outright? Did you use an equipment lease? Did you take out a loan to finance it? Any other options I'm not thinking of?

I need to upgrade my machine to something larger, faster and more powerful, and am looking at all options.

[Gary Hair]

Jay - you should really talk to your CPA to find out the best option for you and your situation. You really only have three options; cash, finance, lease. They all have their advantages and disadvantages for tax purposes and only you CPA can give you the advice you are looking for.

[Jay Selway]

Jay - you should really talk to your CPA to find out the best option for you and your situation. You really only have three options; cash, finance, lease. They all have their advantages and disadvantages for tax purposes and only you CPA can give you the advice you are looking for.

Yeah Gary, I know. I'm just curious how other business owners made the purchase. What options they considered and why.

[Bert Kemp]

Well I bought mine cash because I didn't want payments with interest. Seems silly to buy something on a payment plan and pay interest charges IF you can afford to pay cash.If you can afford cash use a credit card for its protection but pay it off the first month.JMHO:)

[Jacob John]

Did you buy it outright? Did you use an equipment lease? Did you take out a loan to finance it? Any other options I'm not thinking of?

I need to upgrade my machine to something larger, faster and more powerful, and am looking at all options.

I bought mine cash, but only because I got a heck of a deal on it and it's pre-owned. If I do upgrade, like my recently posted thread is suggesting, I'm going to finance with my credit union.

[Mike Null]

I paid cash for both of my laser machines along with my Newing Hall and all my other equipment. My age (78) played a roll in my decision.

[Dan Hintz]

I'm not a fan of interest, so I purchase in one shot whenever possible... my equipment, cars, etc.

[Ross Moshinsky]

There is no right answer. There is just a right for you answer. Typically the worst option is lease to own. You end up paying the most that way.

[Scott Shepherd]

Typically the worst option is lease to own. You end up paying the most that way.

When we were looking at one of our lasers, we looked into leasing. The company quoted us the monthly payments and I did the calculation and it was something insane, like more than 20% interest. They called back to follow up and I told them it was too expensive and explained it was something like 20% interest (or more, I can't recall the exact number). He said "It's not. We don't charge interest, leasing doesn't work like that, it's not interest". I told him he could call it anything he wanted to call it, but it was still a lot less expensive to borrow the money from the bank than it was to lease from him. He disagreed. I ran the numbers for him on the phone and he still didn't think it was a fair comparison.

Bottom line, they wanted a lot more money, in monthly payments and total payments than any other loan vehicle out there. We passed on the leasing and as we're looking at another piece of equipment right now, leasing isn't even being discussed as an option.

[Matt Geraci]

I paid cash for mine. Ended up deciding on the direction I wanted to go last year then hit "All Ahead FULL" on the engines and nailed jobs to put money into the coffers. Ended up doing a ton of research and I purchased a Chinese model direct from a company overseas. Cost, functionality, and customer service went into the decision. I got a demo version of the software and played with it, my sales rep was very well organized, tested some of my own artwork, and sent a ton of instructional videos I believe I got a good deal for what I wanted and will be able to learn settings on my various work pieces once it arrives -- due to my door step in 12 days! Talk, ask lots of questions, have reps to tests for you with your artwork on things you'll be engraving.

[Glen Monaghan]

Well I bought mine cash because I didn't want payments with interest. Seems silly to buy something on a payment plan and pay interest charges IF you can afford to pay cash.If you can afford cash use a credit card for its protection but pay it off the first month.JMHO:)

The OP made no statement about whether he could afford to make a cash purchase or not, he was simply asking why people used the methods they did. It may seem silly to you to pay interest if you can pay cash instead, but that doesn't mean there aren't some very good reasons for buying on credit, one being that you have the opportunity to earn more with the cash than you'd pay in credit interest. Another is that you might want/need to keep the cash available for other contingencies and the interest payment is considered an acceptable cost for the peace of mind that brings). Payment plans do have their place. Paying with cash may severely limit your choices and force you to make unwanted tradeoffs, depending on how much cash you have available. For example, if you want to buy a new laser engraver and only have, say, $4000-6000 to spend, you're stuck with a certain kind of system with specific limitations (such as special software, cooling systems, built-to-price hardware and electronics, etc.) Without payment plans, most people would never own a home or afford a new car (well, unless you are willing to drive a Geo).

Also, if you don't have the cash available for an outright purchase, getting that new laser on a payment plan means you have the opportunity to immediately put it to work paying for itself, which _could_ get it paid off in significantly less time than it _might_ take for you to save up enough to buy it outright (but obviously, that's not guaranteed).

The OP really doesn't need to know why other forum members made the purchasing decisions they did, he just needs to investigate the pros and cons of the different options and then figure out what makes most sense for him. Cash purchases are ostensibly lowest cost but that loses you the ability to do something else with the cash. Borrowing lets you make immediate use of the purchase, which potentially can more than make up for the interest costs. Whether bought outright or on credit, you then own the purchase and other costs thus incurred (maintenance, depreciation, etc.), but leasing may release you from those burdens (for example, the apartment owner remains responsible for fixing the broken furnace so the leaser doesn't have to shell out additional money for that unexpected expense). A bit of a simplistic overview, but still all depends on the individual's situation.

[David Somers]

Morning Jay!

I paid cash for the reasons most gave. It offends me to pay interest and I could see leasing was far more expensive than a loan, even if you were willing to play the semantic games the leasing agent wanted you to play.

And I also agree with Glenn. There are certainly many reasons to take out a loan or lease. None of them fit my circumstances though. While I would have loved to have a Trotec 300 or an Epi or ULS machine I could simply not justify its overall cost for what I wanted it for, regardless of how I managed to pay for it. A chinese machine was going to work fine for what I wanted (and has been working fine) and was at a price point I could justify. And that price point allowed me to pay cash rather than doing a loan or leasing. Perhaps things will change in the future. If they do and a Trotec becomes the tool of choice for me I would look at a loan or lease harder as options to cash. But for now I don't see that happening. I do however, have very high hopes of winning a Trotec 300 in the next SMC equipment giveaway! Fred McMann should be by my house soon with one of those big oversized checks too I suspect! <grin>

Hope that helps with how I made that decision. And good luck to you!

[Ross Moshinsky]

When we were looking at one of our lasers, we looked into leasing. The company quoted us the monthly payments and I did the calculation and it was something insane, like more than 20% interest. They called back to follow up and I told them it was too expensive and explained it was something like 20% interest (or more, I can't recall the exact number). He said "It's not. We don't charge interest, leasing doesn't work like that, it's not interest". I told him he could call it anything he wanted to call it, but it was still a lot less expensive to borrow the money from the bank than it was to lease from him. He disagreed. I ran the numbers for him on the phone and he still didn't think it was a fair comparison.

Bottom line, they wanted a lot more money, in monthly payments and total payments than any other loan vehicle out there. We passed on the leasing and as we're looking at another piece of equipment right now, leasing isn't even being discussed as an option.

It's always very close to a last resort to lease to buy. You absolutely pay a premium. That said, if you're a small sign shop and someone walks in the door with a big contract that guarantees you make some serious money as long as you have a machine and the only way you can get the machine is via a lease to buy, you do what you have to.

I'm pretty sure we had this dicussion a year ago with the OP but I'll once again throw out a few other options.

1. Buy with a CC. 12-18 months interest free and you may be able to flip the debt over to another CC at the end of that period can be a good way to get free money for 12-24 months. Plus you can often get 1-2% cashback.
2. Open a line of credit with your bank. Normally it's a pretty small figure to keep the line open and the interest is often reasonable.
3. Credit card loans. Sometimes through your credit card, they'll give you a 1-5 year loan at a reasonable interest rate.

Basically call up your bank and your credit card company and see what kind of options you have. CPA will know your personal financial situation and also help in advising the best route. Also don't be afraid to call other banks and credit cards. They often want the new business and as a result give you better options.

[Keith Winter]

I try to always buy with cash, if I cannot, I have a small business loan at the bank I draw on. You can finance with the vendor sometimes they run specials but remember they also have to recoup that cost.

[Dave Sheldrake]

Every machine I have or have had...Cash

Way I figured it, if the companies couldn't support the purchase of a new machine then it wasn't business, it was a hobby.

Seen a LOT of people/companies start up, have a "great idea" only to find themselves a few years down the road not being able to meet their credit liabilities and folding :(

Lasers seem to have the ability to do that to people, "wow, I can make 100,000 of these wigits for $0.20 each!" and then produce 50x that in a year..."I'll be rich"

Errr that assumes

1: A million people want or need that wigit
2: When you have sold to everybody that wants one you better have a back up plan
3: Lasers don't just make stuff by pushing a magic button when you turn the thing on

I've seen so so so many people lose their shirts when they jump onto a band wagon thinking "They make loads of money so can I doing the same" when the pool of available work doesn't change that much.

[Keith Winter]

I completely agree. Too many business people go broke because they take out too much credit and always plan on best case.



Every machine I have or have had...Cash

Way I figured it, if the companies couldn't support the purchase of a new machine then it wasn't business, it was a hobby.

Seen a LOT of people/companies start up, have a "great idea" only to find themselves a few years down the road not being able to meet their credit liabilities and folding :(

Lasers seem to have the ability to do that to people, "wow, I can make 100,000 of these wigits for $0.20 each!" and then produce 50x that in a year..."I'll be rich"

Errr that assumes

1: A million people want or need that wigit
2: When you have sold to everybody that wants one you better have a back up plan
3: Lasers don't just make stuff by pushing a magic button when you turn the thing on

I've seen so so so many people lose their shirts when they jump onto a band wagon thinking "They make loads of money so can I doing the same" when the pool of available work doesn't change that much.

[Kev Williams]

Every way possible, but only cash when I felt I had enough backup... Only new machine I paid cash for was the Triiumph, and it was simply because it was less than $5 large to my door and I had the money. I've paid cash for a few machines, simply because they were cheap--

Some machines I've bought used from my NH rep, a couple cash, the spendy-er ones he would finance us for a year or two with no interest.

The vast majority of our purchases have been via leasing. Probably been a little costly but easy at tax time for the most part. (WHAT CPA? ;) ) But in all our years in business, we've never had more than 2 machine payments, and every machine more than paid for itself...

[James Cleary]

Saved all my pennies and bought it outright. Took a little longer than I wanted but I used that time learning Corel and studying everything I could find.

[Jack Clague]

Mine is an loan but not your conventional type so there is no interest plus a hefty personal input as well. I prefer cash in full where ever possible.

[Scott Marquez]

Also, if you don't have the cash available for an outright purchase, getting that new laser on a payment plan means you have the opportunity to immediately put it to work paying for itself, which _could_ get it paid off in significantly less time than it _might_ take for you to save up enough to buy it outright (but obviously, that's not guaranteed).

I purchased my machine with a bank loan, I didn't have enough money in the bank to buy it with cash, but I wanted the benefits of the machine to speed up production in my daily "side business". Because of the increased effiency in cutting, I might be able to pay it off at the end of the year. Yes, I paid more in fees and interest, but the machine will pay for itself.
Scott

[Steve Morris]

If I can't afford to buy it I go without. But I will use credit cards for the protection as long as I can pay it off within the first month or genuine 0% interest loans (only if I have the total amount so I can just keep it in my deposit account a bit longer).

[Jiten Patel]

We paid cash for all our machines. Leasing the machine worked our a ridiculous amount more. I think from memory around £8000 more!!!!

Trotec were very kind in offering 1 year interest free credit if the machine was paid in full. We had no need to do this as we could buy the machine out right, but if the option is there, why not....it allowed us to invest in other bits of kit.

[Clark Pace]

I had a vinyl plotter and sold signs. Saved my pennies and the purchases is from china direct. Took about 1 year to save.

[Tim Bateson]

I "had" been 100% in the all Cash camp. However... My business vision wasn't being met by current equipment & I needed to take a leap of faith. So I bit the bullet and took out a loan for a new machine. I was doing really good before. Now in just a couple short months my business has increased 3 x. Mostly with new work the old equipment could not handle or it couldn't handle well.

Warning - Taking out a massive business loan is not for the faint of heart or a day dreamer with visions of instant wealth or a novice. Over the past 8 years, I have seen half dozen laser businesses come and go.. just in my area. I sometimes simplify and make it sound easy, but there is a whole lot I can not & will not say.

So my advise will always be NEVER borrow money for a hobby, and if you want success maybe not as a business. The only exception is if you can take your vision to the bank and have the brass..... to see your vision through.

[Jacob John]

I "had" been 100% in the all Cash camp. However... My business vision wasn't being met by current equipment & I needed to take a leap of faith. So I bit the bullet and took out a loan for a new machine. I was doing really good before. Now in just a couple short months my business has increased 3 x. Mostly with new work the old equipment could not handle or it couldn't handle well.

Warning - Taking out a massive business loan is not for the faint of heart or a day dreamer with visions of instant wealth or a novice. Over the past 8 years, I have seen half dozen laser businesses come and go.. just in my area. I sometimes simplify and make it sound easy, but there is a whole lot I can not & will not say.

So my advise will always be NEVER borrow money for a hobby, and if you want success maybe not as a business. The only exception is if you can take your vision to the bank and have the brass..... to see your vision through.

Great advice, Tim, and if I can add to it, I remember talking with friends about the difference between billionaires like Mark Cuban and everyone else. People like him fail a lot, but are willing to still take risks, and eventually they hit a grand slam. That leap of faith is how many of us have gotten to this point. My business is still a baby, but I'm not afraid of the risk involved in making it a success.

To that end, I got a great deal on my first laser, but I'm ready to purchase another one, which will have to mostly be financed. Huge risk, but I'm willing to see it through.

Sorry to go slightly off topic, but it's relevant to the discussion and the background of why I'm financing this second laser.

[Glenn Chua]

Cash is King. 0% Interest Credit Card for 12 to 18 months is Queen. We all know the Queen gets what she wants ;)

Purchased CNC a year ago and just ordered Trotec via the Queen method. Can't wait for it to come in.

Just make sure you make 100% payment within the promotion period. I myself am terrible with keeping up with these things, but my wife is great at these types of tasks.

[Patrick Smithwick]

I think the answer to your question is going to be what you are comfortable with. I come from the old thinking of paying cash for all is good. When we started our business I figured out how much I could truly afford cash and we bought our first laser. Not being in the biz we didn't even know if it would fly. After buying , learning and making money we realized that it was truly a good investment. That said we paid cash for the second machine (fiber) as well. What we found was that we didn't necessarily outgrow the size of the CO2 machine but we needed something to keep up with the work! At that point we did do a lease to purchase on an Epilog Fusion which made sense from the accounting perspective for us and we know that we will make the money to pay it off rather quickly with the increased production.
I feel that if you are just starting out and not sure if it is even going to fly then pay cash. You can adjust your business plan down the road.

[Dan Hintz]

Cash is King. 0% Interest Credit Card for 12 to 18 months is Queen.

A reminder to folks who wish to use a 0% card to finance the purchase thinking they get free use of their money for a year or more... companies typically pass the credit card fees back onto you. You had better be sure you can really make a profit with that cash on hand in the coming months, else you're flitting it away in credit card processing fees. 3% on a $20k purchase is $600... if you can't make $600 in interest (or via investing) over a year with that $20k still in your hand, you're better off just buying it outright.

I typically do it that way as it's (relatively) cheap insurance should something go wrong... but you should be aware of what that card purchase is truly costing you.

[Kev Williams]

Cash may be King, but this much is true: without credit, my life would've been one helluva lot less fun... :)

[Ross Moshinsky]

A reminder to folks who wish to use a 0% card to finance the purchase thinking they get free use of their money for a year or more... companies typically pass the credit card fees back onto you. You had better be sure you can really make a profit with that cash on hand in the coming months, else you're flitting it away in credit card processing fees. 3% on a $20k purchase is $600... if you can't make $600 in interest (or via investing) over a year with that $20k still in your hand, you're better off just buying it outright.

I typically do it that way as it's (relatively) cheap insurance should something go wrong... but you should be aware of what that card purchase is truly costing you.

Interest free is a safe gamble for CC companies. They bet on people being stupid, stacking up debt, and then getting hit with 18% interest when the offer comes to an end. Low introductory interest rates have been around with CCs for a very very long time. Even if they don't get you the first 12 months, they figure over the next 5+ years, they'll grab some interest at some point or another. They'd rather collect the money than one of their competitors.

CC fees go up for two reasons. The first being cash back. 1-2% back comes from the merchant. It says it in most merchant contracts. If yours doesn't, they are either taking it all the time or they've figured the average and charge that. The second being fraud. CC's offer insurance and that insurance is paid by the merchant one way or another.

Either way, as a merchant I pay more than my fair share in CC fees so I feel very little remorse using whatever incentives my CC offers. I refrain from using my CC with small merchants when possible but if I go to a big chain that pays $0.00 per trans and gets 1.5% fees vs me paying much more, I don't think twice about charging $2.50 for a coffee.

[Dee Gallo]

I've had four lasers and paid cash for each one. I'm not a fan of credit or owing money. As Dave said, you need a business if you want to make money. A laser is just another tool, not a magic wand. However, if you start out as a hobby, then develop your skills and technique, that hobby can turn into a business eventually.

That said, a laser is a wonderfully fun toy whether for work or play!

[Glenn Chua]

Agreed w/ points from Dan and Ross. In my case I do make sure to pay before promotion period is up and don't carry any credit card debt that is not at 0%.

I don't partake in any 0% credit card deals that charge a fee. If there is a fee Dan is right. Just purchase outright.

For my most recent purchase (yesterday) with Trotec they allow 25% down via credit card. I put this on a card with a 12month 0% promotional period on all purchases. The other 75% is put on a card which allows balance transfers with NO fee at 0% for 15 months. Tough to find, but they are out there from time to time. Since Trotec will only take 25% down via credit I had the credit card company issue a check from the credit card which essentially works like a balance transfer, but since this particular card has NO fee balance transfer I get a true 0%.

[Dan Hintz]

I don't partake in any 0% credit card deals that charge a fee. If there is a fee Dan is right. Just purchase outright.

For clarity, the fee I mention is from the laser company, not the CC company. I think on my last major purchase I got back 1% from the CC company, but that was overwhelmed by the 2%+ added to my bill by the product manufacturer for using a CC... they want checks, not CC, whenever possible, because of those fees. They're certainly not going to eat them (unless they can hide it in a heavily-inflated purchase price).

[Robert Tepper]

I paid 50% down with cash and got a five year bank loan at 2.2% interest for the balance. I am 39 months into a 60 month loan.

My payments are affordable and it has worked out well for my company.

Robert