Buying vs. Leasing Your Equipment: ..  found on webpage: http://www.chiro.org/newDCs


By Larry Markson, DC

The Advantages Of Buying 

If you have the necessary capital, BUY for cash! It has been, and always 
will be, the best and most inexpensive way in the long run.

The next best way, believe it or not, is to borrow the money from 
family. Relatives will give you far better terms over a longer period of 
time, and the "mental pressure" placed on new practitioners, faced with 
having to repay a significant amount of money will be reduced. It is our 
belief that all monies borrowed from parents or relatives should be paid 
back and that a legal document should be executed by both parties. 

Another way to borrow the money is from a bank. We have enclosed a "Loan 
Application Proposal" as a sample of what you need to present to your 
bank loan officer. Try to negotiate a five to seven year payment plan at 
a fixed percentage rate. Currently, most banks are lending money at two 
to three points above the prime rate. You can deduct the interest on the 
loan and also depreciate the assets of the equipment you purchase. 

The bank will usually require that YOU have sufficient collateral to 
back up the loan, or, at least, a strong co-signer with enough assets to 
cover the amount of the loan, in case of default. Generally, the 
co-signer must live in the state where the loan is being made, unless 
negotiable securities are pledged as collateral. 

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The Advantages Of Leasing

If you have no choice, then it is okay to lease your equipment. Remember 
though, that regardless of how the leasing salesperson or company talks, 
leasing IS more expensive in the long run. The leasing company is an 
intermediary between you and a product. They buy from a manufacturer and 
mark up the price or finance charge (points), creating the need for a 
higher interest rate and the necessity for a "buy-back" at the end of 
the lease. Depending on your credit, it is generally easier to lease, 
therefore, more expensive in the long run. The leasing company can sell 
your x-ray unit more easily than a bank, so they accept the equipment as 
collateral more readily than a bank does. Recently though, even leasing 
companies are asking for collateral and/or a co-signer. Lastly, be sure 
to shop for the best rates and be very sure that whoever sells you the 
product and refers the leasing company is not receiving three to four 
points (percent) back as a referral incentive.