Financing fitness equipment or to buy it, is one of the biggest dilemmas that gym owners face. Both options have advantages and disadvantages.

Just like purchasing, you can lease anything. To help you decide whether to lease or buy, you’ll want to ask yourself a few questions. There are many factors to consider when you are trying to acquire your fitness equipment and these questions will help you make an informed decision. Below are some of the questions.

Questions To Ask Yourself When Deciding Between Financing Fitness Equipment And Purchasing It.

What Are The Tax Benefits Of Financing Vs Purchasing?

Consider all tax related ramification of financing and purchasing because they will affect your particular business situation. Leasing has a tax benefit associated with it whereby you deduct the full lease payment immediately. Each type of lease has a different type of tax benefit so you should consult with your tax professional to determine how much you can deduct as an expense on your loss/profit statement. When it comes to purchasing, you only get to deduct the interest portion as an expense.

What Are The Financing Options Of Financing Vs Purchasing?

Making a cash purchase requires you to have large amounts of money. Depending on your financial situation, this may not be a practical option for you. If your cash reserve is not as large, you should consider leasing as a way of financing fitness equipment. Keep in mind that the longer the lease period, the smaller the amounts of payments you have to make.

Do You Need To Frequently Update Your Fitness Equipment?

If you have fitness equipment that gets outdated very fast, such as treadmills installed with computers to monitor progress, then you should consider taking on a shorter lease. Making a cash purchase is simply expensive since you will need to purchase the equipment very often. However, if your fitness center is not reliant on the latest technology, you can go ahead and make a cash purchase or simply sign a lease-to-own agreement. You might also consider taking a long-term lease so that you can make smaller payments and preserve your cash flow.

Do You Prefer Used Or New Fitness Equipment?

Do you need new gym equipment or can you still use used equipment? There is no doubt that used equipment is cheaper than new equipment but this does not make it any less inferior. Think about it. It is cheaper to lease or to make a cash purchase on used gym equipment. However, you might not always have the option to lease used fitness equipment. On the other hand you can finance or purchase new equipment.

If you are just starting out, it is important that you analyze the cost of purchasing vs. financing new/used fitness equipment. Investing in a lot of new equipment can end up straining your cash flow. It is better to start small and increase your equipment acquisitions as your profits increase.

How Long Do You Plan On Keeping Your Fitness Equipment?

If you plan on keeping your fitness equipment for the long term, purchasing it would be a good option. If however, you plan on using it for a short while, then you should consider a short term lease. Alternatively, you can consider a lease that has a buyout option, if you plan on keeping the equipment once the lease period is over.

Conclusion

Financing fitness equipment and buying both offer advantages and disadvantages to fitness centers. The key to making the right decision is to understand exactly what your gym needs and the purpose of the equipment. By answering the above questions, you will be able to ensure that you are making the right decision for your gym.

Leasing is appropriate for any gym owner at any stage of development. However, when it comes to gyms that are just starting up, you will have to put your own credit on the line if you hope to secure a lease. For a cash purchase, you will need to have enough money to make a down payment. However, once you purchase the equipment it will be yours and you will not have to make monthly payments, which can add up to a lot of money.

It is up to you to weigh the pros and cons of both purchasing and financing fitness equipment and determine which one is best for your gym.

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