MFD: lease or purchase?

[Alex MacPherson]

I was thinking today... I have a lot of capital tied up with my camera gear.
I am interested in the new H4D-31 and was considering selling
my current gear to upgrade. Looking through the promotions page,
I noticed an attractive lease rate of $399/mo.
So if I sold my existing setup, I would have more than $12K
in the bank for my business. I would have a new camera with
warranty too... unlike my current gear.

Any thoughts?

[Josh-H]

I was thinking today... I have a lot of capital tied up with my camera gear.
I am interested in the new H4D-31 and was considering selling
my current gear to upgrade. Looking through the promotions page,
I noticed an attractive lease rate of $399/mo.
So if I sold my existing setup, I would have more than $12K
in the bank for my business. I would have a new camera with
warranty too... unlike my current gear.

Any thoughts?

I think it depends on the nature of the lease, your own personal cash flow situation and your future plans for upgrades.

Lease plans are wonderful for business when large purchases are involved as they help spread the payments across 'X' term greatly helping with cashflow. Of course, you pay an interest component for the privilege. If this is the reason you are considering a lease then in my opinion its the right move. Provided your income can meet the lease commitment.

Most leases of camera gear are really Hire/Purchase arrangements whereby you pay 'X' $ per month and at the end of the lease period you own the equipment. You may have to make a balloon payment depending on how you set up the lease. This is all good and well; but it may leave you owning gear 5 years old or so that you now want to upgrade and is now worth more than considerably less than you payed for it over the period of the lease. This may not bother you if you intend to keep the gear - on the other hand if you intend to upgrade it may leave a rather bitter taste in your mouth.

The other type of lease is where you hand back the equipment at the end of the lease period. In the photographic world these types of leases are much more rare since the lease company rarely wants a 5 year old depreciated asset on their books (they want it to be your problem - not theirs).

Depending on the equipment you may be purchasing it may be worth looking into upgrade options at the end of the lease such as those offered by Phase. These can greatly offset the depreciation of the asset. In other words, if you can upgrade to the new model at the end of the lease period by paying a 'difference' figure you will be a lot better off.

There is a lot to consider in leasing equipment. I recently went through this when purchasing a high end printer. In the end I opted to pay in full outright on my amex because I wanted the frequent flyer points. If you have a high credit limit and a good points scheme this can be a very good option as you can make payments back to your CC company monthly to help with cashflow, you get the points and usually the interest rates are not to dissimilar to a lease.

Whichever way you go, look at all the options, all the clauses and consider your upgrade path carefully. Last thing you want is to be locked into a lease on an asset you want to sell off for the newer model but cant get out of.

good luck with the purchase.

[KevinA]

Here in the UK an important difference between lease or purchase/HP finance which is never mentioned is the legal position of a lease. If for some reason you are unable to keep up payments the lease company are able to take back the equipment but you still owe the term of the lease, so no gear but still the debt. If it is HP finance the equipment is yours after a certain amount has been paid back, so you could sell the equipment to repay the outstanding HP debt. Now no one should start a finance deal they can not pay, but things change in life of which you have no control. I do not ever intend taking out a lease on gear again, it's either money up front or HP for me. The tax benefits of a lease in my mind are often over stated, it is in the finance companies interest to persuade you into the lease option, their legal position is much stronger while yours is seriously diminished, that's why everyone wants you to lease. You might of gathered I do not like the lease system for getting gear, I would rather HP over a longer term. Your consumer rights in a lease are far less than a HP agreement.

Kevin.

[paul_jones]

I was thinking today... I have a lot of capital tied up with my camera gear.
I am interested in the new H4D-31 and was considering selling
my current gear to upgrade. Looking through the promotions page,
I noticed an attractive lease rate of $399/mo.
So if I sold my existing setup, I would have more than $12K
in the bank for my business. I would have a new camera with
warranty too... unlike my current gear.

Any thoughts?

i always buy a year or two old, the backs still work fine and i get most of the money back when i sell. i doubt there will be much difference in a h4d31 and a h3d31- besides the focus improvement. h3d's are very cheap right now, im sure ive seen them as a kit for about 8k on ebay.

another suggestion is a phase one back on a H body. this is the most common configuration for rental backs in the world, they work very well together. imho C1 6.0 is far better software than phocus, and all my assistants prefer C1 a lot (they get to use both all the time)

i also like the piece of mind i own the gear outright, and don't have pay anything off- just incase i have a quiet period with work. also, if you find you hate the camera, you can sell it close to what you bought it for with the massive wack you loose when purchasing new, or the cost of getting out of a lease.

leases work best if the there is a massive investment and the workflow is guaranteed.

paul
 

[Morgan_Moore]

My first lease..

My agency went from film to digital (2001/2) I had to get three nikon D1+17-35s which I could not buy out of my pocket

It was fine because I imediatly didnt have a film/lab bill any more and the lease was cheaper than my film/lab bill

It occurred to my that I had no ties with film or the lab

ie with the film/lab I could retire/become a painter/become an accountant/become a dentist/move to Tobago and live on bananas with a hula dancer

With the lease I was basically forced to stick with running a regional photography agency for the next X years

----

My second lease..

I think leases can help you avoid buying crap if you are poor

For when I went MF I bought (cash) a Kodak Proback - I knew it was shit and it was

I sold it at a loss and then got a lease for an H1 system - I knew it was not shit and it wasnt

If I had got the lease in the first place I would have not taken the hit on the Proback

----

So - you are tied in - bad

You can get the 'right stuff' good

In general today kit is so cheap (what client complains about the file from a 5d2?) - I doubt I would need to lease because I could buy cash

I think a lot can be said for spending your business money on non kit -

taking time out to do a better book?
buying google adwords?
lunch for clients?

whatever can drive your business forward

Ulitimately its personal to you, your cashflow and your business, and your tax situation

(lease was tax good for me because you claim 100% as a cost  not just deprciation in the UK (seek advice))

IMO

[donaldt]

if you have the cash just buy it
although digital gear diminishes in value quickly
you still will be able to salvage something out of it in a few years when you decide you deserve something better
and all of the DMF companies offer upgrade plans that are usually great

in the long run buying is better
think of leasing as in close to 5000/year
if you buy the gear, it will sure depreciate much less than 5000 in a year (I doubt it would depreciate 5000 even in 2 years)
and the lenses hardly depreciate at all (if you get them used that is)