When considering the purchase of high-priced, high-tech equipment, business owners often consider leasing as a viable and valuable alternative. Small businesses in particular may have difficulty paying $15,000 for a large-format color copier. But would a sharp, informed businessperson lease a $175 cell phone or a $299 computer? No way!
Why, then, are some businesses leasing credit card terminals that cost just a few hundred dollars?Credit card terminals normally have a 48-month lease term, with a minimum $20 a month payment. That comes to $960 total, or enough money for four or five good terminals. Buy the same thing for $160 from a reputable merchant account provider, charge it to a credit card and you could pay it off in nine months, including interest, for the same $20 per month. Of course, you could also just buy it outright and forget the payments entirely.
Leasing gamesTo make merchants more likely to lease, companies will dramatically inflate the supposed “list price” of the terminal. For example, a company might say that a certain terminal, which costs $160 at a low cost provider, is priced at $500. Without having researched the situation, new customers just might accept this as accurate information. A small lease payment may seem like a bargain, especially if they don’t have the $500 at the moment.
Additionally, some companies will assert that there are tax advantages to leasing versus buying. This is at least half-right, as lease payments are deductible. But all business purchases are deductible, so you need to decide whether you would rather deduct the expense or have that cash in your wallet.
There’s more bad news, too. Credit card machine leasing contracts are binding, so no matter what your circumstances are or how they change, you can’t “escape” the lease before the end of its term. And when that time does roll around, after you have spent that $960, then you have to return the equipment, too.
Avoid the hasslesThere is absolutely no need to get into a long-term lease and pay more than you really need to for credit card processing. You will save money and avoid all the leasing hassles by clicking here to see our wide selection of credit card machines.
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