Car Wash Equipment: Should You Lease Or Buy?

Posted on September 1, 2008 by - Also by this author

 There are various advantages to both methods. Certainly the amount of the equipment should be a deciding factor. The fact that the life expectancy of all types shown is 10 years or longer will affect your decision, as this is a long-term, capital investment purchase.



Most operators cannot afford an $8,000 to $35,000 investment in one payment. Since this purchase may involve the installation of plumbing drains, electricity, and perhaps even a structure to house the car wash system, financing or leasing is probably the preferred method for this type of purchase.



Most dealers will offer financing through a third party. You may want to contact your bank for a capital improvement loan since most car wash equipment will be a permanent installation that will increase the value of your property and be an investment in your livery service. Expect to make a minimum down payment of 10% to 20% of the total. After paying off a five-year loan, in most cases you still have an estimated six years of useful life. The cost of the equipment is depreciated on your taxes over a 10-year period, but the interest on your financing may be deductible if you set this up as a property/building loan.



Monthly lease payments at E-Lease would cost about $660 on a $31,000 system. You would pay first and last month payments instead of a down payment so your total cash outlay is $1,320. All payments are tax deductible and there is no liability on your balance sheet for this purchase. At the end of the 60-month lease, you pay $1 and you own it.



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