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.