Renting Fitness Equipment Is Different Than Leasing. Here is why.
Rental monthly payments are less than the monthly lease payments. And they INCLUDE all the regular equipment maintenance and includes a valuable, Bumper-to-Bumper warranty with ALL repair parts included.
With a closed-end lease, nothing is owed when the lease period ends. You are not obligated to purchase the fitness equipment at the end of the lease. So you do not have to worry about the depreciation value of the gym equipment at the end of the lease. You just return the leased equipment and walk away. But now you must purchase new gym equipment for your Company. The closed end lease requires very expensive monthly payments for your business. Add up the total monthly lease payments you made and if you kept good records, how much in total was spent on maintenance and upkeep of the fitness equipment.
If you turn in the equipment at the end of the lease and it's worth less than the value established in the contract, you're responsible for paying the difference. If you do consider an open-end lease, make sure you're not open to additional charges such as wear and tear. But try to find a lease where you do not owe a large payment to cover the depreciated value of the equipment. Be sure you understand that after the 3 year lease your Gym equipment will be worth about 10-cents on the dollar.
Finally, balloon payments allow you to make smaller monthly payments with a large payment, (the balloon) at the end. While this allows you to conserve your cash flow as you're making those monthly payments, the bad news is, the final balloon payment may be more than the equipment is worth. Balloon payment is set by the finance company. I ask you how big a balloon are they going to want from you?
Now if your monthly lease payment is higher than a monthly rental payment. And your lease payment does not cover your regular preventive maintenance or repair expenses. You have to pay extra to properly maintain the fitness equipment. When your lease payments are finished your Gym equipment is worth about 10 cents on the dollar.
Your lease is a financial liability but when you rent all you have agreed to is a monthly budget that can be cancelled. Renting is not a liability on your credit and you never get an unexpected cost from broken machines and maintenance expenses.
You can't opt out of your lease contract, even if you DIE. And a lease will tie up some of your credit line. A true month to month rental will not be seen by your creditors. It is not a lease and allows you to use more credit for other projects your Business has to pay for.
With your month-to-month rental agreement, you can cancel with only a 30-day notice. This is a smart agreement to provide Health Club quality gym equipment, with all expenses included.
How can you go wrong?
As far as what is less expensive for your business. Get a cost to Lease Health Club quality Gym equipment. Then go out and purchase a regular preventive maintenance contract. And then purchase a Bumper-to-Bumper warranty that covers ALL your parts replacement FOREVER. Now that's expensive.
When you RENT your gym equipment you do not have to pay for a buyout or balloon payment that is much more expensive than what the fitness equipment is worth at the end of the lease agreement.
Look at this, when you lease your gym equipment you still have to pay for the regular fitness equipment maintenance. And you still have to pay for the maintenance upkeep of the fitness machines you don't own. And at the end of the lease is when you really get an expensive surprise.
After you make expensive lease payments for 3 years. Then have to pay the "fair market value" at the end of the lease. REALLY, who determines what the fair market value is? It's the lease company that gains to profit from your fair market value payment at the end of your lease term.
When you purchase your gym equipment, your equipment vendor sells your equipment to the Lease Company. The vendor makes all of his profits upfront and then the Lease companies make a huge profit on top of that.
After your vendor sells your equipment to the Lease Company, they have no more interest in the game.
When you Rent your gym equipment the renting company assumes all the RISK and removes the risk from your company. When you lease or purchase all the risk is placed on your company from day one. And you do not get a 30 day "OUT" if you are not happy with your fitness equipment.
The renting option changes the rules to your advantage by removing your risks and making the promise of performance the rental vendor's problem.
Remove your stress by using the rental option.
Listen, your business success requires partners that have interest in the game for your success. Their success must rely on your business success. This is a partnership your company probably can't survive without.
Renting is the only Business process that makes your vendors success, based on your success.
Duncan Isenhower For a decade, Duncan has managed the installation, service and repair of machines for the top manufacturers of fitness equipment including Precor, Cybex, Technogym, Startrac, Freemotion just to name a few. Providing friendly, top quality, "white glove" service propelled Duncan onto the short list of highly-requested service technicians covering Central Texas. At Austin Fitness Rentals, Duncan is leading the expansion efforts of the finest rental and service team in Texas. His goal is to provide the best solution to meet all of your equipment needs. When he’s not providing stellar customer service, you can most likely find Duncan on the golf course or playing in a gig somewhere in or around Austin.