lincoln financing/leasing?

admin

hi,im new here and am finally going to be getting a more heavy duty welder. i am almost positive that it will be the power mig 215. it will be used for all kinds of autobody stuff and also roll cages/tube chassis car stuff.since im still in school it would be much easier for me to go through my father's trucking company and finance the welder. has anyone gone this route? i would assume it is just like make payments on a car? if anyone has done this, is there anything i should be weary of?thanks,carl
Reply:Financing:Just things to avoid in general.High interest rates, financing fees, high late fees or penalties, deceptive "x days Same-As-Cash" deals, daily compounding...same stuff to avoid as in credit cards.  No matter what the interest rate you are quoted, you should just check by multiplying the payment amount by the number of payments and back out the actual "annualized" rate to check.  What is the financing period you are looking at? 1 year?  Excel has built-in financial formulas.  The web has countless mortgage calculators.  On car and house loans the APR is disclosed by law...on stuff like this...I am not sure.  If you are buying directly from lincoln, these shouldn't be problems, but no harm in checking.Leasing:Leasing is a trickier area.  Generally, companies lease as a way to convert owned equipment (and the confusion over depreciation for taxes) into a flow of services from that equipment (which are all business expenses that are deductible).  It SOMETIMES has tax advantages for businesses, but these advantages depend heavily on individual situations.  For example, computer leases allow companies to maintain a more current fleet of computers an eliminates problems of maintenance and disposal (these issues are essentially out-sourced to the leasing company).  If you plan to use the machine for more than a short period (a year or two), I don't see many potential advantages in leasing a welder.  If you purchase, I think you can expense the entire cost in a single year.  Just remember, at the end of a lease, you own nothing.  Many relatively small business purchases (under a couple or few thousand $) can be expensed in a single year...no depreciation schedules to worry about...I don't know if welders fit into this category, but if they are, you can offset all that income in the first year.  You show a paper loss, but still have the welder as an asset.  And, depending on your marginal tax bracket, you can have a sizeable tax savings.  If you are buying this as a personal welder, leasing is a BAD option.  You can't write off anything, and you end up with nothing at the end of the lease.  Personal (not business) car leases might be a good example of how this might work...you can get into a nicer car than you could otherwise afford, but, in the end, you pay lots, you are responsible for lots, you have lots of hidden costs, and end up with no tax savings and no car at the end of the lease.Last edited by smithboy; 04-11-2006 at 06:09 AM.Smithboy...if it ain't broke, you ain't tryin'.
Reply:smithboy,thank you for all the infomation. from what you said the 12 month financing seems to be the best plan. i guess now i just gotta go to a local dealer and talk with them to see if i have to buy directly from lincoln to finance it, and also to ask about some of the points that you mentioned.thanks again,carl