Are You Looking To Lease Gym Equipment?

MORE ON LEASING FITNESS EQUIPMENT

Pros and Cons to Leasing Gym Equipment

Should a gym owner buy or lease gym equipment? In short, you should consider many factors when trying to decide whether to lease gym equipment or buy it. Let’s compare both options.

Advantages of Leasing Gym Equipment

Leasing gym equipment conserves capital while providing flexibility. This option allows gym owners to procure assets with marginal expenditure. Furthermore, lease payments can usually be deducted as business expenses, reducing the net cost of your lease.

Leases can be easier to find, even with average to poor credit, and have more accommodating terms than the loans for buying gym equipment outright.

Leasing allows gym owners to address the problem of obsolescence; a lease passes the burden of obsolescence onto the lessor. In the fitness industry, this is especially important because gyms need to stay current to remain competitive. Gym owners are free to lease new, modern gym equipment after the lease expires.

Disadvantages of Leasing Gym Equipment

Leasing anything is almost always more expensive than purchasing it when you evaluate it over the full term of the lease.

If you are leasing, you cannot build equity in the gym equipment. So, unless the equipment has become obsolete by the end of the lease, this lack of ownership is a significant disadvantage. You lock yourself into set payments for the entire lease term, and if you no longer need the equipment, costly early termination fees almost always apply.

Buying Equipment

The tax breaks of ownership make purchasing gym equipment appealing; however, high upfront costs can be prohibitive.

Here are some points to consider before buying gym equipment outright.

The most apparent benefit of buying gym equipment is that you secure title or ownership of it. Buying is particularly advantageous when the gym equipment has a long shelf life and is not likely to become outdated quickly, such as strength equipment and free weights. It may be beneficial to purchase the strength equipment and lease the cardio equipment since cardio equipment technology becomes rapidly outdated.

Tax incentives are the other major advantage of purchasing over leasing. The IRS allows you to fully deduct the cost of some newly purchased assets in the first year and depreciation can also offer tax savings; however, be sure to check with your CPA since tax laws change frequently.

So, should a gym owner buy or lease their gym equipment? The answer depends on your situation; one should attempt to estimate the net cost of the equipment and be sure to consider tax incentives, depreciation, and resale value. After deciding which choice is more cost-effective, deliberate the likelihood that the equipment will become outdated, especially if it occurs before the lease matures. As we previously mentioned, one possibility is to purchase the strength equipment and lease the cardio equipment.