Gym owners know that gym equipment can be very costly. There are many different types of gym equipment leases that gym owners should consider taking advantage of.
When a gym owner decides that they need to acquire new gym equipment, they consider the fact that it will depreciate with time. With that in mind, the best way to finance gym equipment is to get a lease. The benefits and risks of obtaining new or used gym equipment should be clearly determined before any decisions are made. All transaction must be document just like you would in any other large capital investment. Here is a close look at the different types of gym equipment leases.
Different Types Of Gym Equipment Leases
Fair Market Value Lease
The fair market value lease is one of the most popular types of gym equipment leases that gym owners prefer. It provides several options for gym owners at the end of the agreement such as purchasing the gym equipment for its current fair market value, renewing the lease or returning the equipment. Gym owners choose this type of lease for equipment that depreciates quickly. With this type of a lease, you can easily upgrade your equipment.
Dollar Buy Out Lease
This type of a lease allows you to purchase the leased gym equipment for one dollar at the end of the lease period. This is also another popular lease choice for gym owners who plan to retain the leased equipment at the end of the lease period. Gym owners who plan on keeping gym equipment for a long time, usually after the lease ends, often prefer to go for the dollar buy out lease. One of the benefits of this type of lease is that you will get to pay small amounts of money as compared to making one large purchase. This frees up your working capital and allows you to allocate funds to other important gym activities.
This is a very practical solution for fitness centers that have recently purchased used or new gym equipment. With this program, you can sell a piece of gym equipment to another gym and then lease it back by making regular monthly payments. This method of financing is a great way to raise capital while having the option of using the previously owned equipment.
Among the different types of gym equipment leases, this is a common choice for gym owners who want to lease new equipment. You can consolidate the remaining payments and roll them over to obtain a new lease with more gym equipment. Gym owners often find the need to acquire new equipment and this lease option provides a simple way of doing so. For instance, if you need a new treadmill, you can finance it with your existing lease to merge multiple payments into one regular payment. This is a great option especially if you need highly specialized equipment.
You can refinance hard equipment with this type of a lease. This means that you cannot refinance obsolete equipment, software or leaseholds. Your leasing company will verify your payment history and from there they will tell you the minimum amount that can be refinanced. This of course will depend on the leasing company you choose to work with. The prices for gym equipment may cost thousands of dollars so a refinance program will afford you the convenience of payments that are more manageable.
What To Consider Before Choosing Gym Equipment Leases
Give your business a credit check up. This helps independent leasing companies to determine if you are eligible for financing. Many gym equipment leasing companies do not require lessees to put down collateral so if you want good leasing rates, you need to have a good credit score. All inaccuracies in your credit report should be rectified.
The dollar buy out lease and the fair market lease are the two types of gym equipment leases that are most common. Look at the one that will cater to the needs of your gym without draining out your finances. Examine the tax benefits that you stand to gain when you choose a lease option. Your equipment lease should at least lower your operating expenses and eliminate or reduce liabilities on your balance sheet, among other benefits. In a nut shell, being aware of the different types of leasing programs and what to consider before you sign a lease will help you make a better decision regarding the capital equipment needs of your gym.
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