Leasing camera equipment is the smart choice for photographers starting a new business. And according to Time Magazine, "The big reason why leasing can be more profitable is that it frees working capital to bring in more earnings." In some instances, the equipment costs can be claimed on tax returns. Upgrading to new equipment is also easier and less expensive. Some things to consider are what type of lease, where the financing will come from, and whether to use a third-party agent to negotiate or purchase the equipment. Also, a good credit score is important when leasing equipment. Vendors want to see an established on-time payment history.
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Decide on the type of lease to use. Finance leases spread the cost of an item over a period of time. "Financial leases generally do not provide for services or maintenance and cannot be cancelled," notes an article in the Alaska Business Monthly. At the end of the lease, there is a small buy-out and the equipment is owned outright. The payments cannot be used as a tax deduction. True leases have lower payments and the lease can be terminated at any time. There is also an option to pay fair market value to purchase the item. These payments can be used as a tax deduction.
Decide what type of lender to use. Some equipment companies will negotiate directly with the consumer. Others prefer to work with a broker, a leasing company or an independent lessor such as a bank or other financial-services company. If you're unsure which type of lender to use, talk with an agent from the bank. They will be able to give referrals or advice. Brokers are more expensive, but they do all the legwork and match the consumer with the right lender for their needs.
As with any purchase, it is important to check all references of the lender and their length of time in business. Another item to look for is whether the lender has helped other photographers lease camera equipment.
Negotiate the cost of the funding services, payback options and length of the lease. The three types of leasing are skip-lease (can miss a payment), step-up lease (small payments initially, increasing later) and deferred lease (no initial payment, but larger payments later). Leases generally run one to five years.
Negotiate the plans for the equipment and the end of the lease. Decide whether to return the equipment to the lessor, to buy out the lease, to purchase the equipment or to start a new lease.
Review the cost and payback terms. Ask for clarification of any fees that are not clearly spelt out.
Go get the equipment or arrange for the delivery.
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