Why You Shouldn’t Lease a Credit Card Machine
Although the practice of leasing has declined in recent years, some sales reps will still try and convince you that leasing is the right option for you. They’ll tell you a bunch of great things like, “you’re not required to pay any money up front,” or “you’re guaranteed a replacement terminal if yours breaks.”
Those selling points might sound good, but I’m here to tell you that they’re not. I’m here to tell you that a terminal lease will end up costing you hundreds, if not thousands of dollars. I’m also here to tell you that with the fees you’ll end up paying to lease a terminal, you could purchase that same machine in a matter of months…if not immediately. Heck, you could probably buy more than one.
Additionally, if you lease a terminal you may also be required to purchase equipment insurance, which is another added cost. And, not to mention, you may even have to return the damn thing at the end of your lease. WTF?!
Why Buying a Credit Card Machine is the Best Option
Listen, a terminal lease carries with it a 48 month lease agreement (which is the usual term). The cost of that lease can run anywhere from $50-$100/month. That is a LONG time to be paying for a machine that doesn’t cost more than $400 these days. Why not just purchase one outright?
The cost of the purchase is completely tax deductible, and you won’t get stuck paying $2400 for a machine that costs $400. That’s 600 percent in interest over the course of four years. Yikes!
Even if you can’t afford to pay cash for your credit card machine, you can just charge it to a business credit card. The interest paid is still tax deductible, and assuming you have a 14 percent APR, if you pay the same $50/month toward your credit card balance that you would have paid toward your lease, you’ll have the terminal paid off in less than nine months. That’s a savings of nearly $2,000 that can be better directed into developing and expanding your business. It’s really a no-brainer.
The “Free” Credit Card Machine
Some processors offer up “free” terminals to their merchants, but as we all know, there is nothing free in this world. Generally, a free terminal carries with it a yearly “Terminal Replacement” or “Warranty” charge of anywhere between $50-$100/year. That’s still much less than what a lease would cost you though.
If you’re already locked into a lease, you most likely won’t able to break the contract. As I mentioned before, a lease term is usually 48 months, so you’ll have to find out when that term ends before you can walk away without a penalty.
If you’re not currently in a lease, but are considering one, don’t be deceived by exaggerated claims from sales reps. Instead, do your own homework and calculate the total cost of leasing vs. owning. I’m sure you’ll find that the best and most affordable option lies in ownership.