Equipment leasing - someone must think I'm stupid!
 

I've been looking at laser cutters lately. The Chinese ebay-laser cutters are looking like a better and better option. The Redsail Lasers seem to get decent reviews, and are very affordable.... but come at a price...lack of support...crappy software...

Anyways, I looked into a Full Spectrum Laser -- USA made, USA support, etc. Price? Not outrageous. Pretty decent, actually, at about $8000. Nothing like the Epilog lasers than run 2-3 times more.

So, lets see if we can lease it, since I'm about to pay out a butt-load of cash for a plastic injection mold that was just completed.
Got accepted. Spoke to the equipment leasing company, who wouldn't give me the APR. hmm..:confused:

I just calculated the APR.
If I've got my math right, a 36 $404 month lease for a $9245 lease give a total of $14,544... or, the way I figured, a whopping 32.26%:eek::eek::eek::eek:

I think I'll pass, thanks.

Hmmm, have you considered used, and/or industrial equipment auctions? There is a guy here in AZ that picked up a couple ex-Intel YAG lasers for dirt cheap years ago, and started a B2B engraving biz (primarily firearms). The machines are a bit outdated and the "power units" take up considerable space. However, since then he's been going full-tilt and has a bunch of work from gun manufacturers and .mil contracts. Last time I was at his shop he was showing me Al/Ti warheads that he had just finished engraving SNs onto. :cool:

Obviously you wouldn't get any factory support/training going that route, but with the potential savings you could probably hire a guy to come and show you everything you need to know, and still have a bunch of cash leftover.
Or, these days you could probably be an expert in a matter of hours just by watching a few youtube vids. :D


Industrial auctions might be few/far between, but places like this might be worth checking out: Laser Resale - We buy, sell and broker qualified used equipment

SmileWavy

You can lease pretty much anything, especially if you really want it!

The premium for leasing 'emerging' or 'rapidly advancing' technology is very high, and should be.

I'm not an expert - but careful with used lasers - on some types, the source can significantly degrade. I would research very diligently before buying anything used.

The interest is high because there is significant risk of businesses going bad - if you go bankrupt, they end up with - used tool that's worth 30 cents on the dollar. These guys sure need to turn a profit - but their rates are based on math taking into account default rates and bell residual value of the tools.

I would look at how much money the tool makes you. What if you get it now - 3!years earlier? It may pay for the high rate easily.

As I recall there is (or used to be?) a significant tax advantage for lease vs. purchase. (lease payments fully deductible??)

I'd look at the whole equation, cash flow, writing off lease payments, increase in productivity, decrease in effective wages due to time savings..... Part of the lease payment is probably tax, you can always try to negotiate the money factor or cost of the unit....

Pm 9dreizig, his son does equipment leasing. We used to do a lot through PNC at my last job, but they wanted the higher $$ stuff. There are options out there, but the lower $$ stuff will be a higher rate.

There is a place in Seattle working on/ close to launch, of a consumer level/desktop laser cutter.

Perhaps wait a bit.

this "laser beam"...was it mounted on a shark's head by chance?

No way would I ever buy cutting edge stuff from China if it's available in the USA, where support will be better if you have problems.

Your calculation seems off...

So it's 36% interest over 3 years... Or, closer to 12% average a year... Not 36% apr.

Pretty darn reasonable compared to credit cards...

What rate did you expect?

For hobby stuff the Chinese stuff is fine. Just bought a plasma cutter for $375... Works great. 5 x cheaper than a Miller. Do I expect it to last 20 years? Nope.

Glowforge. Looks cool, but won't exactly meet my needs. I need to be able to cut through about 1/2 inch of acrylic. And it would likely get some fairly heavy use.

hmm. I used Wolfram Alpha to come up with that figure, and adjusted the APR until the monthly payment matched both the lease amount and the total $404x36months.



http://forums.pelicanparts.com/uploa...1472088499.jpg

No, your looking at straight interest if the principal remained the same for the three years. Principal is getting paid down, so interest is much higher.

Yes. This. The lease can be advantageous for businesses.

Thanks for sharing... makes sense!

Bo

'equipment leasing' is just another way of saying 'B credit'.

Here's the amortization schedule.http://forums.pelicanparts.com/uploa...1472132231.jpg

no.

you can fully deduct the entire purchase price in year one using section 179 depreciation if you buy.

if it's a bargain purchase lease ($1 at end of lease) you can do the same. Which means you impute interest and the tax treatment is essentially identical.

if it's a true lease (no bargain purchase at the end) then you are paying a LOT more than you think for the machine and are only deducting the lease payment itself. on a true lease you need to know how much of the value of the machine you are 'using up' to determine what your real cost is.

ptthth. My credit is OK. I just shelled out a ton of money for an injection mold, so we're a bit low on cash right now.



http://forums.pelicanparts.com/uploa...1472268157.jpg

http://forums.pelicanparts.com/uploa...1472268171.jpg

http://forums.pelicanparts.com/uploa...1472268186.jpg

Hah, thanks for that. Yea.. that APR is absurd.

I was looking at Paypal Working Capital, and it looks like what they offer is pretty darn reasonable. No interest rate... just a plain, flat fee based on the amount you need. Up to 15% of your yearly sales made through Paypal.
You choose a percentage of your sales that you want to go towards repayment... the higher the percentage, the lower the fee. If I chose 10%, my fee would be about $1500. Or $970@ 15%... $703 @ 20%.... down to as low as a flat fee of $454 if I chose a percentage of 30%.

I wonder what sort of interest rates those would be comparable to.

I might have to look into it some more, but it seems very reasonable.
(edit)
Yikes. I just went partway through the process to see what they'd offer. At a 10% repayment rate, the flat fee worked out to what would essentially be a very similar 32% interest rate. 15% repayment worked out to be about 17.5% based on the flat-fee.
The example they gave was very skewed.

Wow. Not cheap by any means. But those bobbins would look great in my MIJ Strat. SmileWavy

I really have to get in touch with you sometime. I have spent way too many hours dikking around with subpar pickups.