Rent or own? How to choose?

[hitye]

Recently I got an offer from Konica for the C7000, include IC-306 and SD-506.
It's for 60 months rental. But I think the total rental is 140 percent of the selling price.
That's quite higher than business loan.
But the konica rep told me that rent is the best choice....

[gordo]

Recently I got an offer from Konica for the C7000, include IC-306 and SD-506.
It's for 60 months rental. But I think the total rental is 140 percent of the selling price.
That's quite higher than business loan.
But the konica rep told me that rent is the best choice....

Talk to your accountant about the tax implications of buying vs renting/leasing. I've always believed that the general rule in business is that if it appreciates in value - buy it. If it depreciates in value - lease/rent it. The Konica will depreciate in value.

best, gordo

[Happyprinter]

I agree with Gordo, talk to your accountant first. Your company structure and tax situation might dictate that one is better than the other. Then check rates. We recently purchased a piece of equipment that will depreciate, but we purchased it. Why? Check rates and options Lease vs. buying. You will find as we did that purchasing is generally less money than leasing. On our equipment, leasing rates, after checking several companies were $100-150.00 a month higher than purchasing thru our bank. Big difference on total investment over say a 4 year period. Of course it will depend on your credit and your banks willingness to loan. You might be stuck leasing/renting. Good Luck.

[hitye]

I agree with Gordo, talk to your accountant first. Your company structure and tax situation might dictate that one is better than the other. Then check rates. We recently purchased a piece of equipment that will depreciate, but we purchased it. Why? Check rates and options Lease vs. buying. You will find as we did that purchasing is generally less money than leasing. On our equipment, leasing rates, after checking several companies were $100-150.00 a month higher than purchasing thru our bank. Big difference on total investment over say a 4 year period. Of course it will depend on your credit and your banks willingness to loan. You might be stuck leasing/renting. Good Luck.

Yes, I think I can get <10% loan rate from bank, that means estimate $900 lower than monthly rental.....

[Happyprinter]

Shop around. Check a credit union if you have access. Our bank gave us a rate of 7.5%.

[BigTony]

If you buy & install this calendar year you can receive quite a tax credit thanks to Section 179 of the Federal Tax Code - check this site for details: Section 179 and Bonus Depreciation | Section179.org Use their calculator to see how much of the purchase price you'll get back as a credit against federal taxes owed.

You need to check with your tax person to make sure you qualify; most small businesses do because they don't exceed the limits as outlined.

And - nobody knows if it will still be in force for calendar 2012.

As for a lease, if it's structured as a buy-out lease (not fair market value) where you own the printer after the lease term expires for $1 - $101, it might also qualify under Section 179.

[hitye]

If you buy & install this calendar year you can receive quite a tax credit thanks to Section 179 of the Federal Tax Code - check this site for details: Section 179 and Bonus Depreciation | Section179.org Use their calculator to see how much of the purchase price you'll get back as a credit against federal taxes owed.

You need to check with your tax person to make sure you qualify; most small businesses do because they don't exceed the limits as outlined.

And - nobody knows if it will still be in force for calendar 2012.

As for a lease, if it's structured as a buy-out lease (not fair market value) where you own the printer after the lease term expires for $1 - $101, it might also qualify under Section 179.

thx..but I'm in New Zealand..

[BigTony]

Ok...but this is such a great credit that you might want to consider moving...

[UnlimitedBT]

Hi Hitye. How are you? Interesting question.. I my opinion, Gordo is 100% right.
Think about it - in 5 year this machine will be nearly worthless. Lots of things may happen down the way - If machine is faulty / does not perform as promised - while you leasing you may have some leverage VS if you own and machine does not perform well and dealer is not being helpful - you stuck with machine anyway... I've seen cases where Xerox said to it's customer - hey, you're way too demanding we are cancelling your contract, good bye.

[OutSourceD]

That means your lease rate is very high. This may be due to poor credit or simply a lack of business credit. If your credit is good this lease rate if a slap in your face, or more appropriately a Louis Slugger up your bum should you agree to the terms of the lease.