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Thread: MFD: lease or buy?

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    MFD: lease or buy?

    I was thinking today... I have a lot of capital tied up with my camera gear.
    I am interested in the new H4D-31 and was considering selling
    my current gear to upgrade. Looking through the promotions page,
    I noticed an attractive lease rate of $399/mo.
    So if I sold my existing setup, I would have more than $12K
    in the bank for my business. I would have a new camera with
    warranty too... unlike my current gear.

    Any thoughts?

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    Re: MFD: lease or buy?

    It all depends on how much you are going to use the gear. For short periods of time, it make sense to lease it. If you use it on a continuous basis, it makes sense to own it.

    Also, it's a little bit more than $399/mo since you have to pay insurance for it (or at least you should).

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    Re: MFD: lease or buy?

    Quote Originally Posted by Dolce Moda View Post
    I was thinking today... I have a lot of capital tied up with my camera gear.
    I am interested in the new H4D-31 and was considering selling
    my current gear to upgrade. Looking through the promotions page,
    I noticed an attractive lease rate of $399/mo.
    So if I sold my existing setup, I would have more than $12K
    in the bank for my business. I would have a new camera with
    warranty too... unlike my current gear.

    Any thoughts?
    $399/mo for $12k? ...presumably you get the option to buy at some point.

    What proportion of your (worst case) profit is $399/mo?

    Could you make really good use of the $12k?

    Even if you needed $12K to pay off a credit card, would it be a good deal?

    ... but presumably you have the option of get $12k if you lease, or paying a similar sum to upgrade?

    Have you discussed this with your bank? How much would they let you have for $399/mo?

    I suppose that $399 is some where near what it would cost you to hire the kit for a day?

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    Re: MFD: lease or buy?

    Who are you kidding? Do you really think you are better of with leasing. 399USD might not seem much but have you calculated the interest rates & costs? I am pretty sure it will get to at least 7% which is fairly expensive money.

    You will only be spreading your pain over a longer period so you will not notice it that much.

    Do you really think the 12K you are getting can be put to work at a higher rate? If that is the case it might make sense.

    I would be really careful with leasing. If you cannot fulfill your contract at any point in time, which is something most people do not want to think of, you will loose the equipment and still be held accountable for the remaining periods. Really nasty!

    Leasing implies you are going to use the equipment extensively which makes a good case for simply owning the stuff.

    You might better start tomorrow spending 399USD a month for marketing and communication to get you the assignments you need to upgrade your existing equipment if you have a need for it.

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    Subscriber & Workshop Member GrahamWelland's Avatar
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    Re: MFD: lease or buy?

    Consider this, a good way to go broke is to have lot's of capital assets and no operating cash ...

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    Re: MFD: lease or buy?

    Another good way to go broke is to have overextended on debt & loans. Trust me I have been there. With lots of capital assets you are at least always free to stop business, sell off and get another job.Anyway, there have always been 2 ways of thinking in this. At this stage in life I rather have no debt.

    Both situations are not healthy, owning too much useless assets as well as having too much debts&loans. There have been lots of people/companies that have gone into all sorts of constructions. Eg. sell your house, rent it back. In general sell your asset and rent/lease it back. In practically all cases this turns out to be really expensive money and in most cases a short term solution that leads to misery in the longer run.

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    Re: MFD: lease or buy?

    I've leased equipment. Wouldn't recommend it to anyone who wasn't absolutely sure it worked for their business.

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    Re: MFD: lease or buy?

    Quote Originally Posted by Dustbak View Post
    Another good way to go broke is to have overextended on debt & loans. .... With lots of capital assets you are at least always free to stop business, sell off and get another job....

    True, but I highly doubt that you have to sign up for a long period of time. With the extra cash he can put the money in marketing/advertising to generate clients that will bring him the cash. Tying up the money in gear will not bring him money.

    At the end, we can only debate this. Only him and his accountant knows what's best for him. Sometimes it makes sens to lease and sometimes it doesn't. There are no absolutes.

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    Re: MFD: lease or buy?

    Quote Originally Posted by Valentin View Post
    At the end, we can only debate this. Only him and his accountant knows what's best for him. Sometimes it makes sens to lease and sometimes it doesn't. There are no absolutes.
    Absolutely, oops, err, definitely!

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    Re: MFD: lease or buy?

    Hmm. I will have to give it more thought. I am still undecided.

    The only experience I have with leasing is with cars. I leased previously and then bought my last car. In retrospect, I wish I hadn't bought the car... the depreciation wasn't worth it.

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    Re: MFD: lease or buy?

    It's total a matter of what your business model may be.

    If you had a paying job and rented the gear, would you absorb the rental fee, or include it as a line item on the invoice? Most studios include rentals as expenses.

    Studios that own their gear generally charge a digital capture fee ... which is usually something close to what it would cost to rent the same equipment. Enough of those, and the gear pays for itself over a 2 to 3 year period ... just in time to upgrade

    Leasing should be investigated carefully ... it depends on whether it is a "lease to own" deal, or just regular leasing. Generally, lease to own just slices up the retail price over 12 months and the final $1. provides full ownership. But $399. per month doesn't sound like that sort of lease. Often a regular leasing price structure is based on the full retail price, plus a percentage ... with the payment based on residual value. What is the residual value being quoted? BTW, any taxes due on leasing generally are not included in the quoted monthly payment ... so be sure to inquire about that also.

    Some camera companies provide attractive leasing options to move product out the door ... simply ask how many years, what the percentage you will be paying, and how much to buy the item at lease end.

    A purchase cash outlay is viable if you have good business projections over the coming 12 months.

    -Marc

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    Re: MFD: lease or buy?

    Hmm... maybe a mount change on my current back and an H2 film camera for now.

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    Re: MFD: lease or buy?

    One of the big downsides of leasing anything, aside from the usually nasty rates built into the agreement is the fact that with high-tech gear like a MFDB, you're locked in to payments on a product with an ever-decreasing new price curve, that (now) depreciates like a rock off a cliff, and whose lease residual value can be optimistic - as in higher than probable market value. Try and get out early because the new units on the shelf have 'WTF?" pricing on them (vs what you paid for your model) for more features and you'll pay thru the nose and the some.

    There are a number of considerations to think about re: taxes, etc, but a better option would be the trusted method of simply selling some existing gear against a used MFDB (let someone else eat the initial depreciation) and if needed be, getting a prime+_ personal loan/line of credit, via your bank, to offset any shortfall on the gear sale. Gives you low, if any, payments and ability to turn back the clock with minimal pain in interest lost and additional depreciation if you have a change of heart.

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    Re: MFD: lease or buy?

    Quote Originally Posted by Dolce Moda View Post
    Hmm... maybe a mount change on my current back and an H2 film camera for now.
    I think that would depend on what back it is, the cost of the mount change, how much a H2 can be had for, and how much it actually upgrades your end product or user experience from where you are now.

    It could be a good route, or it could be throwing good money after bad. Hard to tell without specifics.

    Straight out purchasing is usually a steep hit unless you keep and use the gear. Depreciation losses are only on paper and nothing to fret about if you actually use it to make money over a period of years.

    In general, upgrades work fairly well if you utilize the manufacturer's trade promo deals when available, coupled with any incentives a dealer may be offering. These tend to work in favor of those who skipped an upgrade step and have older gear for trade.

    If budget concerns weigh heavily, I'd look for the most current used piece I could find, investigate the usage history, and whether there is a bit of warranty still intact. Like the low use, mint H4D/40 with warranty to April 2011 that I may be selling when my H4D/60 arrives in a week or so

    -Marc

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    Re: MFD: lease or buy?

    I would have a talk with my accountant and go through the financials. Don't know about Canadian tax law or your business model to really advise. In the US a lease is a write off and a purchase depreciated over xx years. When your accountant plugs in the numbers it will become clear on which makes financial sense. You may want to talk with your dealer about how the company supports end of lease retention. Do they offer a sweet deal to keep you as a customer? Or when they introduce a new model will they upgrade you at xx$?
    Quote Originally Posted by Dolce Moda View Post
    I was thinking today... I have a lot of capital tied up with my camera gear.
    I am interested in the new H4D-31 and was considering selling
    my current gear to upgrade. Looking through the promotions page,
    I noticed an attractive lease rate of $399/mo.
    So if I sold my existing setup, I would have more than $12K
    in the bank for my business. I would have a new camera with
    warranty too... unlike my current gear.

    Any thoughts?
    Al Tanabe my website https://www.altanabe.com

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    Re: MFD: lease or buy?

    I have got a lead on a H3DII-31 at the moment for a decent price. It doesn't have TrueFocus... but fits the budget.
    If it works out, it will tide me over until the H4D makes financial sense.

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