Are you a gym owner who is struggling to figure out if it’s best to choose new or leased gym equipment?
It can be tough to determine whether shelling out the money upfront and gaining an asset is the smartest move or if a monthly payment and the ability to constantly upgrade is better for you.
We’ve laid out the pros and cons to buying and leasing so you can make the decision that suits your business best.
Overall Cost of New or Leased Gym Equipment
As with most big purchases, buying will always end up being cheaper than leasing when you amortize the cost over a period of time. If you own a gym and have the cash to buy your equipment up front, it’s not a bad idea. Remember, if you own it, you can always sell it.
Gym equipment is meant to last several years. It’s not something you’re going to want to swap out constantly; who can afford to do that? So, if you purchase the equipment when you want to replace it, upgrade or even sell your gym, you can make some real return on your investment.
If you don’t have all the cash available, you can always finance your equipment so you’re paying a monthly fee toward ownership. This is a similar structure to leasing in the sense that you won’t be without a large amount of capital at once but still gives you the opportunity to own and then potentially sell the equipment at the end to make some money back.
Leasing is a terrific option if you don’t have the cash up front or want to make a short-term commitment. Many lease agreements are flexible and you can decide how many years you’d like to rent the equipment for if you aren’t certain about the future of your gym.
Similar to leasing a car, you’ll make monthly payments that won’t add up to you owning anything in the end. You’ll also likely spend more over the course of the lease than you would if you purchased it outright because the lease rate will be higher.
You want your gym to look good and up-to-date. Part of this means you’ll need to customize your equipment and make it appear cohesive. This is possible to accomplish when you purchase it all at once. You can customize the colors, sizes, and connectors so your gym maintains a particular aesthetic that you’ve decided on.
This option won’t be available to you with most leases so you’ll be subject to what the company has in stock and forced to make that work. If that’s not a deal breaker, the plus side to leasing when it comes to quality is you can pretty much guarantee you’ll always have modern equipment.
Because lease agreements are relatively short, a few years at most, you can swap out your old equipment for the new version whenever your lease comes to an end. This way, you can always have modern equipment in your gym.
If you purchase your gym equipment, you’re going to want to keep it until it’s no longer working since you’ve invested your money in these machines. You want to get the most bang for your buck. This will likely mean having aged equipment in your gym which may cost you members or discourage people from joining altogether.
If you already own a gym then you know machines break down, make weird noises and need routine maintenance and sometimes repair in order to keep them running smoothly. If you’re planning to own, you can expect these costs to add up over time since the machines will be solely your responsibility.
The longer you own a machine the more repairs you can expect to have along the way. When you lease, it’s a different story. Because you’ll have the equipment for a shorter period of time, it’s less likely to break down or have a serious problem while it’s in your hands.
Depending on the vendor you use, some leases will include maintainence options and repair discounts or deals that are already factored into the monthly cost. This can be a lifesaver if something does happen to a machine because you know it’s being handled by the company you leased from.
This may increase your monthly payment but will likely balance out over time if you do end up having problems with the equipment and need to use the maintenance and repair options available to you in the lease.
There are tax benefits whether you decide to lease or buy. If you lease, you can deduct a portion of your monthly payment and categorize it as a business expense. This could earn you a sizable refund at the end of the year which would make up for higher monthly payments and the fact that you don’t have an asset with the leased equipment.
On the flip side, if you purchase all of your equipment in full at once, you can claim a major write off on your taxes as well. You’ll have to discuss with your accountant to see how either option shakes out in terms of actual returns and of course, what’s best for your business overall.
Financing is a nice third alternative to buying outright or signing a lease when it comes to your equipment. If you have poor credit or need as low a monthly cost as possible, you’ll want to select a lease option as opposed to financing.
Your credit needs to be very strong in order to get a good financing deal otherwise the interest rates and monthly payments will be very high. If you have strong credit and more flexibility in terms of a monthly payment, a finance option might be right for you. It’s ideal for people who are committed to owning the equipment but don’t have the upfront cash to purchase it all at once.
With a financing option, you are stuck with the equipment. This means in five years if you’ve just completed paying it off but now there are bigger better machines on the market, you aren’t going to want to upgrade or sell your equipment since you’re just beginning to start to reap the benefits of ownership.
However, if your gym gets into trouble and you have to close it down, you’ll always have the option of selling the equipment once you’ve paid it off, which could help you stay above water if you’re having a hard time.
What Works Best for You
Keep in mind that each business is different. When determining whether it’s best to invest in new or leased gym equipment, you have to consider how well your business is doing already, where you see it going in the future and how much cash you’re able to shell out at once.
We’d love to help you build your dream gym. Check out our available equipment and contact us for guidance.