Leasing

Discussion in 'Business Operations' started by Pristine PM, Jan 11, 2006.

  1. Pristine PM

    Pristine PM LawnSite Member
    Posts: 208

    Hi Guys,

    I just went to a landscape show, and talked to the guys about leasing machines. Does anyone do this and does it work out well?

    Thanks,

    Jon
     
  2. kc2006

    kc2006 LawnSite Silver Member
    Posts: 2,442

    I wanted to lease mowers after reading an article in turf I believe it was. The only shop around here that would lease mowers wasn't very happy about doing it and tried to turn me off from it. So I haven't had luck finding a dealer that would do it.
     
  3. Green-Pro

    Green-Pro LawnSite Bronze Member
    Posts: 1,420

    Looking into leasing a skidsteer with buy out option at end of lease, don't know, not completely sold on that one. I am leasing a Z-Spray with a $1 buyout at the end of the lease, they require you to make at least 12 monthly payments before you pay it off. I put about $2K down and will make the 12 payments by mid summer, plan is to have it paid for by season end 2006. They will sock it to you if you stretch the payments out to the full term, just as with anything else bought on time, but this can be avoided by paying it off early. There will still be some over and above the list price coming out of your pocket doing it this way but it can be held to a minimum $ amount IMO. The lease with option to buy will also help build company credit.
     
  4. Flex-Deck

    Flex-Deck LawnSite Silver Member
    Posts: 2,846

    IMO - Leasing can not be too good, as the leasing company is going to make money - that is why they do it. Go to your bank with a list of customers, a projected income, and projected expense sheet, and get a line of credit. If you cannot provide this info to your bank, maybe you need to assess where you are at. I will guarantee that leasing equip will not save an operation that is doomed due to lack of customers or anything else.
     
  5. Envy Lawn Service

    Envy Lawn Service LawnSite Fanatic
    Posts: 11,062

    Oh now guys....

    Rather one pays cash, finances or leases really depends on the individual person and the individual business. Likewise, which is best to do for tax purposes varies from business to business.

    Jon, it is best you ask a business financial planner or accountant about this. Schedule a meeting to discuss the pros and cons in order to make an informed decision based on what's right for you and your business...... instead of relying on the ill educated opinions of lawnboys to decide.

    No pun intended for either party.
     
  6. hoyboy

    hoyboy LawnSite Senior Member
    from Chicago
    Posts: 346




    Sorry, but this is wrong. For tax purposes, purchasing will always be better. It will not vary from business to business.
     
  7. Envy Lawn Service

    Envy Lawn Service LawnSite Fanatic
    Posts: 11,062

    So let's hear your credentials there Einstein :rolleyes:


    PS-> I rest my case...
     
  8. procut

    procut LawnSite Bronze Member
    Posts: 1,853

    I've always thought leasing mowers was an interesting idea. You would always have newer equiptment with warrentys, thus downtime would not likely be an issue. Have yet to find any costs or a dealer willing to do it though.
     
  9. Envy Lawn Service

    Envy Lawn Service LawnSite Fanatic
    Posts: 11,062

    Well that's because it's not pushed, publicized, ect because there are very LCO's who have a clue about it one way or the other, and there is no push to attempt to educate. Plus, contrary to popular belief, we LCO's do not make up the largest sector of buyers... and out of those some might benefit while others would not, while still yet few of them would understand and/or end up going that route.

    As a matter of fact, truth be known I actually spent some time consulting the finance manager of a major mower manufacturer about the in's and out's of finance and lease programs as it applies to this industry segment and sales. They did select and implement a lease program that did have good chances for success (for various reasons). How well they followed my total plan for the best chances of end result program success I do not know though. I might be motivated to contact them and see how the numbers panned out. This time next month will mark 18 months.

    In the end though, many lease and finance programs are made available to the dealers. They then pick and choose what programs they wish to participate in. A lot of programs, incentives and rebates DO REQUIRE SOME DEALER PARTICIPATION... in the form of dealer costs. Therefore, most offer those that put the most in their pocket, rather it be in the form of zero participation or if they do participate in order to move more volume by incentives to put more money in there pocket overall.
     
  10. lawn_guy

    lawn_guy LawnSite Member
    Posts: 24

    My company currently leases 5 out of our 6 mowers. They're set up on Exmark's "New Every Two" program....2 year leases. For tax purposes, leasing allows the cost of equipment to be deducted immediately as an expense, just like fuel. Purchasing requires depreciation over several years, unless a section 179 deduction is taken in the first year (write it all off at once), but this is limited to a certain maximum amount each year.

    By leasing our mowers, we are able to minimize downtime and maintenance/repairs. As far as cost, we pay about $270/month for a 27 hp 60" Lazer Z w/ striping kit. Our bankers like our limited amount of debt....5 mowers times $8,000 would be an extra $40,000 in the negative. Anyway, leasing is not for everyone, but it works for us.

    By the way, if I were driving these mowers myself, I might consider buying instead (possibly)....they would last much longer if I didn't have young guys driving them all day.
     

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