Lease POS System
With potentially expensive hardware prices, leasing a POS system for your business might seem like a smart financial choice.
We'll highlight all aspects to review before making your final decision.
Come dive in with us as we take you through the costs, pros, and cons of leasing POS systems.
Cost Of POS System Leasing
The cost of leasing a point-of-sale system or paying for lease renewals will depend on the type of equipment you are leasing and the company that you are leasing from.
On average, businesses spend anywhere between $69 and $300 per month, depending on the system they choose.
If you want more accurate information regarding pricing for POS systems and POS leasing, click the button below and fill out the short form. Our free tool gives you quotes from POS providers in your area based on your needs!
POS Financing & Leasing Structures
For new businesses, leasing a point of sale system might seem enticing. After all, you need a point-of-sale system if you ever hope to make money through transactions.
The unfortunate thing is that purchasing POS software and hardware upfront can be very costly. Many small business owners believe that money could be better spent elsewhere, especially if they are starting up their business for the first time.
This is why many people choose to lease POS systems.
There are many different types of leasing options available, including:
This is a lease in which the lessee eventually has the option to purchase their leased equipment at a time that is specified in the contract. However, they can also make rental payments over the remaining portion of the contract.
A sale-leaseback, otherwise known as a leaseback, is a contractual arrangement in which the POS provider will lease back the POS hardware from the purchaser.
Lease to Own
A lease-to-own type of lease is pretty straightforward, as it is exactly what it sounds like. A lessee will continue making payments within the lease agreement with the intention to one day own the point-of-sale hardware. This is one of the most popular types of POS system financing.
A quarterly lease is one in which the lessee will pay for their equipment every three months during the lease term.
Fair Market Value
A fair market value lease is one of the most flexible financing solutions out there, enabling the user to gain access to the latest technology without having to own it. Essentially, you pay a fixed amount discussed in the contract to use the point of sale software or hardware for your merchant services each month without the obligation to purchase it when you are finished.
Lease Line of Credit
A lease line of credit might seem complicated at first, though it can be a very helpful option for many small business owners. Instead of financing a very particular piece of equipment, you will receive a lease line of credit from the lender.
With this lease line of credit, you can initiate leases with different providers, allowing you to make more flexible decisions about the hardware and software you choose.
It's important to note that all of the agreements above can be flexible. You should never settle for a lease agreement without looking at all of the options first to make sure that you are getting the best deal possible.
Is It Better To Lease Or Buy A POS System?
While leasing POS systems might seem like a really good idea if you're a startup company, many things point us in the direction of making an outright purchase instead.
Let's go over a few reasons why you might choose to purchase your full system outright instead of leasing.
When you sign an agreement with a point-of-sale provider, you more than likely lock yourself into an agreement. While multiple options generally exist for lease terms, they are often 48 months or higher.
We understand that starting a business often means having low cash flow for a while, though as you get going, you will probably start making more money. Unfortunately, you'll still be putting quite a bit of that money toward the new equipment that you purchased years ago.
Plus, you can't often break a point-of-sale provider contract early unless you want to pay exorbitant fees for doing so. While it might seem like you can save money at the start by signing a lease, it will cost you more money in the long run.
Speaking of more money...
High Interest Rates
One of the most obvious downsides to signing up for leasing is that you'll have to deal with high interest rates, which can add up quite a bit over the course of the term. Most point-of-sale providers have rates anywhere from 13-20%, which ends up being a hefty sum of money.
You're sometimes required to pay certain fees when you sign up for a leasing service. These fees are often there to cover things like hardware becoming obsolete or depreciation on new equipment.
If you want to enter into a leasing agreement with a provider, you will likely have to go through a credit check. If you are working on getting a startup off the ground or you have poor credit to begin with, this could be quite detrimental to you and your business.
Can Take a Long Time
One downside to leasing that customers rarely think about is that it will probably take some times to actually get your system in hand. From going through lengthy agreement to getting credit checks to sending n payments, new businesses often struggle with not having their terminals and other equipment in-store when they're finally ready to start selling.
Overall, while leasing might seem like a smart idea for startup companies and businesses that are on a tight budget and can't afford to spend thousands of dollars, as they aren't making enough revenue, there are many things that might make leasing a much more expensive option.
A Few Advantages of Leasing
Of course, leasing isn't all bad.
For starters, one of the main benefits is that you'll always stay up to date with the latest and greatest POS tech. You'll often see upgrades outlined in lease agreements, which often come for free.
It's important that you are keen on looking for that in your agreement. There are many stories of leaseholders finding out that they could not get upgrades from their providers, leaving them without any other options. It can be a major benefit for you and your business to check whether or not you'll be given the ability to upgrade before signing anything.
Secondly, leases can be easy on your budget at the very beginning, much more than paying thousands for an entire system right off the bat. Plus, you can always claim the sum you pay out each year on your taxes instead of amortizing it over the course of many years.
If you're thinking that a lease might be a good idea for you, take a look at a few companies that provide this service.
POS Leasing Companies
CIT, which is a division of Citizen Bank, is one of the top leasing companies in the United States, offering quality point-of-sale financing for just about any kind of business or company.
They offer a simple financing process and all different kinds of pricing for specific needs.
POS Nation is another company that can help your business to take advantage of leasing services if you feel that it is the right choice for your needs.
They provide tons of value for all business types and estimated monthly payments so you can find a plan that fits your budget.
The Bottom Line
When all is said and done, the answer to whether or not you should get a POS system lease for your business comes down to your needs and your specific situation.
If you are a startup company that is working on a really tight budget and you're looking to have more flexibility at the beginning, a leasing service might be the right choice.
However, if your budget is a little bit bigger and the kind of business you offer requires a more customized system, you might choose to purchase your device outright instead of saving the extra money upfront.
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