Should I Purchase or Lease My Indoor Tanning Equipment?
Whether you are looking to provide your customers with a luxurious indoor tanning experience, or dream of tanning in the comfort and privacy of your own home, figuring out how to pay the equipment you need may prove to be a daunting task.
To help you determine your best financial option, we have compiled the following list of pros and cons to leasing and purchasing your tanning bed(s) and indoor tanning equipment.
Pros and Cons of Leasing Tanning Bed(s) and Indoor Tanning Equipment
Whether you are shopping for tanning bed(s) for business or personal use, Leasing may be a great option. With little cash up front and manageable monthly payments, you can maintain cash flow while either providing your customers or yourself with the ultimate in high-end indoor tanning.
Minimal Initial Investment – Although leasing a tanning bed does require an initial down payment, the cash required up front is significantly less than what is required for outright purchase or a typical bank loan.
Low Monthly Payments – Leasing terms help you enjoy fixed monthly payments that are significantly lower than that of a bank loan.
Business Cash Flow – Because you are spending less up front, this allows you to reap the benefits of your indoor tanning equipment with minimal stretching of your company or household budget. With a lease, you can keep more cash in-house to reallocate to other investments.
Purchasing Power – Due to a smaller down payment and lower monthly payments, leasing affords you higher end tanning equipment that you may otherwise have not been able to afford. This gives you or your customer’s access to the ultimate luxury tanning experience without breaking the bank and without the credit history requirements of a traditional bank loan.
The Latest and Greatest – With the flexibility of a lease, you can replace your tanning bed(s) every couple of years, allowing you to keep up with industry trends and advancements in technology. This is especially helpful to business owners who are competing within the tanning industry and need to keep on the cutting edge of indoor tanning technology.
Tax Advantages – (consult with your tax advisor) In some situations, you may have the option of writing off the “depreciation” of your tanning bed. Tax laws vary by state and circumstances of your agreement, so always consult with your tax advisor before basing your decision on tax benefits.
Higher Cost Over Time – Over time, you will pay considerably more for your tanning bed(s). Although the initial down payment and monthly payments are lower than that of a traditional bank loan, you will ultimately be paying on your lease for a longer period of time and will never own the equipment.
Greater Financial Commitment – Unlike a bank loan or outright purchase, with a lease you will never own your tanning equipment. Your monthly payments will continue for the duration of your lease at the end of which, you will either have to turn in your tanning bed for a new model and a new lease, or you will be required to go from making lease payments to loan payments at which point you will be buying older, used equipment and paying a lot more than it is worth.
Pros and Cons of Purchasing Tanning Bed(s) and Indoor Tanning Equipment
Lower Cost Over Time – Although the initial down payments and monthly payments are typically higher than lease payments and outright purchase requires you to plunk down the full amount at once, you will end up paying much less for your tanning bed(s) over time. This is due to the fact that despite the large financial commitment up front, one day you will have the satisfaction of owning your high end tanning equipment and will not longer be required to make payments.
Freedom of Ownership – Because the tanning bed(s) or indoor tanning equipment belongs to you, the equipment is yours to sell at any time. Should you decide that you no longer need or want your tanning bed(s), you have the option of selling your equipment and either paying off your loan, pocketing the cash, or putting the cash from the sale of the older equipment towards the purchase of new indoor tanning equipment (which could make putting down that larger down payment a little easier the second time around).
Tax incentives – Under Section 179 of the Internal Revenue Code, you may be able to fully deduct the cost of your tanning bed(s) or indoor tanning equipment in the first year. Again, you will want to seek the council of your tax advisor before basing any finance decisions on this advantage, but in many cases this can add up to even bigger savings at tax time.
Large Initial Financial Commitment – Especially in a commercial application where multiple tanning beds are needed, the substantial initial investment an outright or bank loan purchase requires could tie up a large amount of cash. In many cases this can create problems for a small businesses or your typical household.
Keeping up with the Joneses – In many cases, a lease affords you the opportunity to upgrade your equipment every two years or so, keeping you or your business on the cutting edge of industry trends with minimal effort. If you purchased your tanning bed(s) or indoor tanning equipment, you will need to sell your old equipment in order to buy the new and improved version.
Take home message: Consider each option carefully. Your best decision will be one that is based on personal circumstance. Weigh the good and the bad of each and determine which works best for you.