Lease Versus Buy: The Math Your Equipment Rep Won't Show You
Lease Versus Buy: The Math Your Equipment Rep Won't Show You
Lease Versus Buy: The Math Your Equipment Rep Won't Show You
Your compressor is dying. New one costs $8K out of pocket. Lease is $180/month, 60-month term. That's $10.8K total. Seems worse, right? You're wrong.
Buy: $8K cash now. Resale value in 5 years: $1.2K. Repairs year 2-5: average $400/year. Net cost: $7.8K. Plus opportunity cost on the $8K if you need that cash for marketing or hiring.
Lease: $10.8K over five years. Warranty included. Replacement covered if it fails. Upgrade option at lease end. Technology risk: none. Your cash flow: minimal impact.
The math shifts if you're borrowing at 8% interest. Buy at $8K becomes $8K plus $1,200 in interest. Now lease looks smart. The math also shifts if you plan to keep the practice 20 years. Then buy makes sense.
Real talk: most practices should lease high-depreciation equipment (compressors, suction, small instruments) and buy high-duration equipment (chairs, lights, X-ray units). But you have to know your cash position first.
Lease agreements vary wildly. Some lock you in at 6% escalation. Others offer buyout at 40% of remaining balance. Read the fine print. The equipment rep is paid on gross margin, not your efficiency.
The decision isn't buy or lease. It's: do you have cash flow for capex, or not?