Planning to buy equipment for your arcade business?
Leasing is one of the better ways of acquiring arcade equipment. Some business owners prefer to lease arcade equipment rather than purchasing because it doesn’t tie up their cash and gives them tax benefits.
If you don’t have extra cash reserves, arcade equipment leasing is definitely for you.
Whether you’re just starting or an established business, you can still use this type of leasing.
Today, we will discuss the things you need to know about arcade equipment leasing that is coin operated.
Let’s discuss what are the expected rates, benefits, and how you can qualify for it.
So… let’s get to it!
What You Need to Know About Arcade Equipment Leasing
Arcade equipment is expensive…
Not all business owners have the money to purchase arcade equipment. Sometimes, it becomes a deterrent factor, especially for startups.
With arcade equipment leasing, you don’t have to worry about coming up with the money to acquire arcade equipment.
Before you start applying for arcade equipment leasing, you have to know the costs involved in it.
You also need to understand how rates differ between those who have good credit and those who don’t.
The interest rates can also vary depending on the length of business finance operations.
But what are the requirements needed to acquire arcade equipment leasing through the leasing companies?
Requirements to Lease Arcade Equipment
Unlike bank financing, getting approved for arcade equipment leasing is quick and easy. All you need is to have the basic documents in order to go for game lease of arcade equipment.
Some of these documents include:
- Registered physical business address,
- Proper business permits, and
- List of arcade equipment you wish to purchase.
If you’re after low-rate offers, you have to make sure that you have a good credit score.
Check your financial background and settle your debts before applying.
Arcade Equipment Leasing Requirements for a Startup Business
Arcade equipment leasing requirements for startup businesses in the united states who are looking to lease arcade equipment up to $150,000 are pretty simple.
- A good credit score
- FICO score of 650
- To fill out a single-page application form
There’s no need for financial statements, tax returns, business plans or any other detailed disclosures.
Leasing arcade equipment that costs more than $150,000 requires a score higher than 700.
Just remember this: The higher your score, the better your chances of getting approved.
Other requirements include:
- A complete borrowing history,
- At least 5 tradelines,
- Driver’s license,
- Bank account number, and
- Equipment quote.
Arcade Equipment Leasing Requirements for a Long Running Business
An existing business can get an approval of up to $300,000 for heavy equipment, while you can get $200,000 for lighter equipment.
Requirements for application include:
- a complete and duly signed application form
- a personal financial statement
- business’ bank statement for the last three months
If in case you do not meet or are unable to submit the said requirements, you may be able to submit the following instead:
- equipment sales quotes.
- vendor representative contact information.
- last two years of personal and business tax returns.
Rates on Leasing Arcade Equipment
Equipment leasing interest rates vary depending on several factors.
These factors are as follows:
- Business’s credit score
If you have a good credit, your interest rates will be pretty low. Otherwise, higher interest rates can be expected.
- Business’s age
If you’ve been in business for a few years, rates won’t be a problem for you. Startups, however, have to endure higher monthly payments.
- Length of your agreement also affects your monthly payments. For example, in a 90-day deferral program, you can operate the equipment without paying for the first 90 days.
Equipment Leasing payments for Good Credit with over two years in business.
If you had no trouble paying your bills — and are quite on time in doing so — during the course of your business’ operation, then you’ll be offered low interest rates on equipment leasing.
Keep in mind:
A credit score of 650 and above can get an approval of up to $150,000 to buy new or used arcade equipment.
Here’s an example:
If you lease arcade equipment worth $50,000, with one payment due up front your monthly payments would approximately be:
- $1,567/month for a 36-month term
- $1,225/month for a 48-month term
- $1,018/month for a 60-month term
No residual, $1 buyout.
And one more:
Under the 90-day deferral program, your first three monthly payments are $0 followed by the remainder of the term. The remainder monthly payments would be.
- $1,728/month for a 36-month total term
- $1,319/month for a 48-month total term
- $1,081/month for a 60-month total term
No residual, $1 buyout.
Equipment Leasing payments for Start up family fun businesses
If you’re a startup business with a plan, you probably have money saved up to start this company and experience in the family fun industry.
Arcade equipment worth $50,000, and a 680+ credit score, will have an estimated monthly payment of:
- $2,228/month for a 24-month term
- $1,621/month for a 36-month term
- $1,288/month for a 48-month term
- $1,088/month for a 60-month term
No residual, $1 buy out.
Equipment Leasing Payments for Bad Credit but Good Cash Flow
Arcade equipment worth $35,000. If you have bad credit, you should expect to have higher monthly rates.
That means if you have a credit score lower than 650, your monthly payments would approximately be:
- $1,798/month for a 24-month term
- $1,329/month for a 36-month term
- $1,100/month for a 48-month term
- $975/month for a 60-month term
Typically structured with a FMV buyout or term residual lease.
In addition to higher interest rates, you must also submit other requirements to gain approval:
- Have a cosigner
- Additional collateral
- Good average balance on the bank statement to prove cash flow of your business
- Down payment or security deposit could help get an approval
The Benefits of Leasing Arcade Equipment
Businesses often have two options in terms of equipment acquisition:
Outright purchasing, and equipment leasing.
The former is, especially for a startup business, not the best choice, since you have to pay a huge amount of upfront cost.
So why is arcade equipment leasing then considered the wise option?
Leasing Increases Your ROI
Let's say if you brought $25,000 worth of new arcade equipment and it brings you $6,000 in extra monthly revenue.
An arcade equipment lease for $50,000 with a 60-month term with a payment of $1,018, Under the $1.00 purchase option, your net income is estimated to be:
- $298,920 over the lease term
Gives You Financial Flexibility
As compared to bank financing, there’s no need to pledge your assets with equipment leasing.
You may finance 100% of the equipment’s cost with a flexible plan that meets your budget.
Equipment leasing also offers lower monthly payments, which improves cash flow. This allows you to preserve your working capital for other business expenses.
Qualify for Tax Deduction
With a FMV (Fair Market Value) lease, you can deduct 100% of the lease payments as a business expense.
Meanwhile, a capital lease (1% buyout) offers the option of Section 179 tax benefits. You can deduct the lease amount as a business expense in the first year of purchase up to $1,000,000.
Preserve Your Business line of Credit
Keeping a business line of credit healthy and open is probably one of the more important goals of a company.
With arcade equipment leasing, you can spare your business line of credit with your local bank for other expenses.
Equipment financing also strengthens the cash flow of your business with predetermined monthly line items.
Final Thoughts on Arcade Equipment Leasing: Requirements, Rates, & Benefits
With the rise of the modern family and game creation/development becoming better and better, having an arcade business doesn’t sound too bad of an idea anymore.
One of the many benefits is that with it comes significantly high profit as well as the promises of loyal customers coming back for more.
The only problem now is how you can acquire equipment for your future (or existing) money generator.
The fact is that these machines don’t come cheap, and you may find it hard to simply purchase them and offer cash up front.
Fortunately, arcade equipment leasing is here to save the day. This method of equipment acquisition allows you to gain ownership of an equipment via flexible payment plans. It even offers benefits for your business’ financial background.
To know if you’re qualified to lease, just assess your credit score. A good credit and has been in the business for at least 2 years, guarantees you a low monthly payment.
On the other hand, if you have a bad credit, just be ready to pay higher monthly payments and a bigger percentage down.
As a business owner with good credit and over two years in business, with equipment leasing, you’ll get to finance 100% of the equipment’s cost with a flexible plan that suits your budget. You can even get working capital added onto the same equipment lease term. Add working capital up to 25% of the equipment cost to your agreement.