Coffee Machine – Buying on Credit VS Renting
So, buying a coffee machine straight out is not an option for you, which is entirely understandable. It can be a very costly exercise, especially if you are looking at a larger machine for an office or restaurant space. But the thing is, you kinda need it! You’re ultimately left with two options: To buy the machine straight-out by means of capital supplied by a third party (a bank, for example) – or you could rent the machine from the company who supplies it.
Each of these options have major advantages and disadvantages – and we’re going to tackle them head-on.
Buying A Coffee Machine On Credit
Off the bat, the first (and biggest) advantage of this option is that you may eventually end up owning the machine. For any capital expense of that magnitude, it’s human nature to want some tangible type of reward, in this case – it’s being the outright owner of the machine. Be careful, though, because sometimes the machine remains the property of the supplier and the customer needs to refinance if they wish to keep using the machine (this may be equivalent to one month’s repayment, known as a “purchasing fee”).
The nicest part of this is the considerably lower repayment amounts (heightened further if you opt for a longer repayment term).
Furthermore, it’s a big plus to have that machine available to you a lot sooner than it might be for a rental. See, with rentals, you’ll likely need to pass an ITC check and have your application vetted before you are approved – which can be a time consuming process.
Now, on the flip side, buying ANYTHING on credit means you are inevitably going to end up paying far more for that product in the long run. Sometimes, you can choose your repayment terms, but in most cases you will be paying prime plus X% – a set amount the bank decides.
You’re paying more and forfeiting the benefits that come with renting a machine – such as free maintenance and swap-outs, should the machine be faulty. The biggest downfall to consider is that if you “want out” of he bank-financed rental option – it’s not going to happen.. It’s like a bond or credit card – no skipping payments etc. It’s as good as set in stone.
Renting a Coffee Machine
This is typically categorised as renting without a middleman / third party – you rent directly from the supplier. This, too, has many advantages as well as disadvantages.
Firstly, the biggest downfall is that the machine will likely never belong to you (unless you have negotiated on a rent-to-own basis with your supplier). In most cases, supliers can “lock” you into a committed 2 – 3 year rental term, to which you will need to adhere. Take this into consideration before committing!
In terms of repayment amounts, it’s possible you will pay back a higher “interest rate” on the machine. This is in part due to the fact that coffee machine suppliers will need to recuperate their debt a lot quicker than a bank, because they do not have as big of a cash-flow as financial institutions.
However, the advantages far outweigh the disadvantages.
Renting a coffee machine means that you are guaranteed follow-up service and support. You won’t have to wait days on end before having your machine repaired, and best of all, if the coffee machine needs replacing this will likely be covered in your rental terms.
Some coffee machine suppliers add a surcharge to “insure” your machine and allow for replacements, repairs or servicing -so if this is a major concern for you – make sure you understand the full impact before signing the dotted line.
Because coffee machine suppliers are in a “smaller league” and don’t have the legal backing a financial institution might, they will be more willing to look after you as a customer and avoid costly legal issues arising; because of this, you will likely be able to get more bang for your buck.
Although this is the highest-priced rental option, it’s possibly still a better bet than buying the machine through a the bank because of the flexibility of offers.
In rare cases, coffee machine suppliers are in the position to lower the rental amount per machine if you commit to using a certain set amount of their product each month. Sometimes, you are able to choose a month-to-month rental option which is great for those of us who are naturally indecisive or using a coffee machine for e the first time. It gives us the peace of mind needed to find our perfect fit in a coffee machine.
We explain this rental structure in detail in this video.
Buying a Coffee Machine on Credit VS Renting A Coffee Machine –
Who Wins?
Everyone wins! Why? Because each solution is the right fit for someone, and the wrong fit for another. It’s impossible to tell you which is YOUR best fit, but consider these things before choosing your financing option:
Do I want to own the coffee machine?
Which option will work out most cost-effectively for me?
Can I commit to the rental amount and duration?
What do I ultimately want form my coffee machine?
Let us know which option worked out the best for you and why? 🙂