When buying equipment for your tanning business there are two ways to pay for it including leasing or purchasing. A tanning bed lease is a good option for businesses because it allows a minimal down payment and small monthly payments which will free up your available cash.
Oftentimes in business, leasing is a great option because it allows the owner to maximize cash to purchase equipment in addition to using bank financing and owner equity to fund the entire project. It is also sometimes the only way to finance the total project when the owner’s personal debt to income ratios are too high for the bank to finance the entire project on debt and equity alone.
Fees from leasing companies will vary by company and it is important to do your research as there are many shady leasing companies that have stolen money from many uninformed tanning business owners.
A lease will be collateralized by the equipment being purchased with initial fees ranging anywhere from $150 to $1,000. A good contract will have these fees charged at the beginning of the lease, applied to reduce the term of the lease and should have a $1 purchase option at the end. Another thing to look for before signing a lease on tanning equipment is to see if you are allowed to sell or switch equipment before the end of the term without a significant fee.
Lease rates range from 7% to as high as 30% and offer flexible terms are available from 12 – 60 months.
Be sure to fully read (along with an attorney) and fully understand all of the paperwork and research the leasing companies business practices before acquiring a tanning bed lease because of potential misleading information (and there is a history of many bad companies in the tanning industry). Skipping this step will certainly put your business at a severe disadvantage or even result in failure.