Posted 19 October 2007 - 12:52 AM
Posted 19 October 2007 - 01:25 PM
Posted 19 October 2007 - 07:21 PM
Posted 20 October 2007 - 09:46 PM
I would look into a bank loan over a lease. You can save a lot of money paying back a loan early. With a lease you owe the full amount even if you pay it back in the 1st year.
While I agree with you on the loan vs lease interest, I have found that 90% of gear becomes obsolete after a few years. Leasing gives the customer the option to turn the gear in and acquire new. Thus leaving them only paying for the use not the entire amount of the gear. Also, leasing offers tax benefits loans do not. You can write off the entire loan payment each month on a lease. With a loan, you have to depreciate the gear over a 3 year period. Also with a bank loan, the bank place a lein on the entire companies assests. With a lease, the lein is only placed on the gear itself. Just a few more benefits that a loan does not offer.
Posted 20 October 2007 - 11:03 PM
If you have decent credit, go with one of the 0% or 1.9% credit card cash advances. Obviously you need to be carefull and read the small print but there are cards (my citibank visa for example) that will give you 1.9% for the life of the loan. You get a lower interest payment, lower monthly payment and a greater flexibility with payments. You could keep the loan for years and never have a big payment or you could knock the whole thing off in a few months with no pre payment penalty.
Posted 30 October 2007 - 07:59 PM
"While I agree with you on the loan vs lease interest, I have found that 90% of gear becomes obsolete after a few years."
I would imagine that if you are buying a RED camera, primes, support, etc... you are expecting to get more than a few years out of it. If you have say $100,000 into an entire package, even if the camera updates, that should only cost you 10% - 15% of your initial investment to upgrade. The lenses, monitors, support, etc.. should last at least 10 years.
"Also, leasing offers tax benefits loans do not. You can write off the entire loan payment each month on a lease. With a loan, you have to depreciate the gear over a 3 year period."
In the US, you can write off up to around $100,000 of equipment investment in the first year, or depreciate it over 3, depending on what is better for your situation. Check with your accountant on the exact figure. I had a good year when I bought my rig, and I wrote the whole thing off.
"Also with a bank loan, the bank place a lein on the entire companies assests. With a lease, the lein is only placed on the gear itself."
My particular loan only liens the equipment, not my entire companies assets. This can be negotiated with the bank. Depending on your credit & borrowing history, they may require a personal guaranty. This is very common. I never worry about liens or guaranties, because I have a solid business plan, and tragedy would have to hit to default on the loan. Even so, I could always sell the gear to pay off the debt.
I'd also check as to whether you own the gear at the end of the lease or not. Sometimes they do a $1 buyout at the end. The best years while owning gear are the years it's fully paid off, and still working. I'm more a fan of loans. The relationship you cultivate with your banker will do you well in future endeavors, and money is relatively cheap these days.
Posted 08 December 2007 - 03:15 PM
Equipment loans are a good source of financing. However, most loans require a personal guaranty and most often show up both on your personal credit as well as on your personal financial statement as a liability therefore reducing your net worth and borrowing capabilities. It is my understanding, a lease even if personal guaranteed does not show on your personal credit nor do you have to show on your personal financial statement as it is defined as a "contingent liability" which I understand to mean only if the company defaults and the leasing company persues the personal guaranty that it then becomes a personal liability which is reported on credit & must be reflected on a personal financial statement. If one gets down that road, a loan or lease wouldnt be the issue repayment and credit character would be. I also hear it may be easier to qualify for a lease versus a bank loan and from what I know of bank documentation HAS to be a lot simpler to execute.
I hope this helps,
While I already have my rig...I'm looking at getting a Red and need to finanace. Since I know a number of you have had to deal with the leasing companies I'm wondering if anyone has had any good experiences or bad ones with particular companies. I know its bit off topic but for those that are looking to lease a new rig I figure it wil help.