How do you guys pay for your studio equipment?

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pisces7378

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Can anyone give me any advice on the pros and cons of leasing studio equipment. I am planning on making a bunch of purchases soon. And I mean a ton of $$$ here. The is obviously no way that I will be able to do it myself. I am going to have to get a loan, or a lease or something. I have read a book about studio finance and business, and it talked about leasing being quite an oftenly used method of payment for studio gear. But I am not quite sure what exactly the difference is between a leasing agreement and a financing agreement like through a local music store. Are leaseing agreement really that cool? Which has the lowest interest rate? Loans or Leasing Agreements?
 
Isn't a lease just like renting? Meaning you don't own it when you're done paying for it? Anyway, do you own your home? If so, a home equity loan would probably give you the most money at the lowest interest rate. Another thing to look into is grants. I apply every year for grants that are awarded to artists/musicians/etc.. by my state (I've yet to receive any loot though). Something to consider, at the very least. Nothing like free money...or so I've been told.
 
He's Probably talking about in-store financing.... It's handy, but the interest will kill you... I know someone who bought a set of V-Drums for $5500 over 2 years, and could have bought it cash for $4200... thats over a grand in financing fees....

I suggest you talk to a family member who could loan you the money, or some other route.. In-store financing should be a last resort.. It's very pricey.

If your talking about a "ton" of gear, your probably looking at like $5000 or $10,000 in financing fees depending on what your Idea of a "ton" is

You could buy alot of gear with that cash.


Whats wrong with working your way up?... Just save and buy one piece at a time... that what most people I know, including me have done...

Joe
 
That's what I did too. A piece at a time. It took years to get where I am today.
 
I am a male Prostitute. I do tricks, and save all my trick money for gear. I am saving up for a Nano-Compressor ( I am not very good at it).
 
Money

A few thoughts:

- The kind of "leasing" you're talking about may be traditional leasing (which is, indeed, exactly like renting), or what's sometimes called a "lease to own" arrangement, where you wind up owning whatever it is at the end of the day (perhaps after paying a balloon at the end of the lease term that's still less than the value of the equipment). A "lease to own" arrangement is really more like a loan. When businesses do this, it's called a capital lease, and is treated as a loan for accounting purposes (okay, it's more complicated than that, but if you want to get into synthetic leases and the like, this isn't the forum for it).

- Consumer "lease to own" arrangements are sort of notorious for abuses. Historically, they've been less regulated than straightforward loans, and thus have been preferred by sellers who are dealing with poor-credit unsophisticated consumers. Think: absurdly high interest rates, exorbitant fees, inflated purchase prices, etc. I think the area is somewhat better regulated now, but I couldn't claim to be an expert. If you want to do one of these types of leases, make sure you are capable of analyzing the economics, and that the terms makes sense.

- A key distinction is the the difference between business financing and consumer financing. If you're acquiring something in order to make money with it (business financing), you analyze it one way. If you're acquiring it just to have fun using it, you really need to analyze it in a different way. If you really think you're using your home recording equipment in a real business (i.e. you are really going to make a reasonable return on your investment and your time by using it), I would suggest you need to be more realistic ... unless you are already succeeding at that and have some sort of a track record.

Generally, financing something for business use often makes sense (the incremental amount you earn from using it, less interest, is more than enough to compensate for the risk assumed). Financing something for consumer use really only makes sense, in my view, if it's a big-ticket, really long-term item, like a house or (possibly) a car. Of course that's only my view.
 
I dont how much of this will apply since you live in Germany.

I help a lot of clients finance software we sell and it is very difficult for new business to get credit. It will usually come down to the owners personal credit rating and he will have to lease in his own name instead of the company. The downside to that is you lose any protection that you would have if the loan or lease was in the corporation's name.

Your best bet would probably be a New Business loan where they will require a pretty extensive business plan. Since the equipment will be it's own collateral the loan may be easier to get then a general loan to cover business startup costs but that is just my guess.

In any aspect of show business the best way to get money is through a private investor. There are a lot of people with more money than sense and they want to be a 'player' in the 'business'. Sell them on that idea and you can probably get some cash out of a bored doctor or lawyer.
 
personally, I think some exorbandant fees for financing equipment can easily be offset just by the fact that you have the equipment NOW. A $1000 fee for $5000 equipment is very high, but not if you put it to GOOD use right off the bat....like attracting $5000 worth of sessions immediately.

But, I'd think of getting a signature loan, or something like that...even a low credit card rate loan...if you're talking just a couple grand, might be preferable. The stores are gonna rape you...that's for sure.

home equity if you're talking more $$$.

and...if you're in a large enough area, consider (renting)leasing your big ticket items only...like your monster analog board, or whatever. It'll be out of date before you pay it off and depreciate faster than water thru a screen. Your payments may actually end up being cheaper in the long run VS ownership.

But, knowing what numbers you are dealing with first (like what's a ton of $$$), is the first question needing answers before you can continue this discussion.
 
I am with barefoot. I can get student loans for like $5000 over what I actually have to have to pay for school. I don't normally get that high because I am not making money yet, but since I only have 1 year of school left, I think I am going to milk these student loans a bit.

Maybe you should enroll in college for a semester and get a student loan. Maybe you could even take a sound class or a music theory class or something you might find useful. The loans are very low interest and are for like 20 years or something.

Beezoboy
 
Beezoboy said:
I am with barefoot. I can get student loans for like $5000 over what I actually have to have to pay for school. I don't normally get that high because I am not making money yet, but since I only have 1 year of school left, I think I am going to milk these student loans a bit.

Maybe you should enroll in college for a semester and get a student loan. Maybe you could even take a sound class or a music theory class or something you might find useful. The loans are very low interest and are for like 20 years or something.

Beezoboy
Click to expand...

Man...... Student loans for gear?.... Scary.... I understand not every young person has a shitload of money, and needs to rely on student loans, but using it for gear?????

I know a few students who came out of college with like $50,000- 80,000 Debts.....Partied and bought a nice car, cool stereo, cool computer, come away with a huge debt..... Thats like a fucking mortgage, You'll be 40 before your through paying it off. I would keep school loans, for school strictly.....

In my opinion of course.....
 
I hold up the occasional liqour store. Don't forget to treat yourself to a nice scotch before you go on the lam.
 
I heard a real good suggestion not too long ago regarding sperm donation.
 
"if starting an independent bussiness, and you need cash fast, apply for as many credit cards as you can"---my bussiness professor once said.

AL
 
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