Relion Finance have helped literally hundreds of salon professionals start up a new salon ranging from one person home salons through to larger salons and salon groups.
So, what is leasing? Asset leasing is usually any type of finance that uses the asset as security for the loan. What’s an asset? An asset could be anything from salon chairs, mirrors, basins, dryers, to the reception desk, point of sale systems and computers – even the security CCTV.
So therefore the leasing we’re talking about is where we use the asset (or equipment) that you are buying as the security for the loan – it means that you don’t use any property such as your home (if you have one) as security. Why is that important? Because it means that if things go bad, we don’t come chasing you for your home. It’s a low risk type of finance – and the lower the risk, the better off you are.
It doesn’t matter whether you are looking to upgrade some of your salon furniture and equipment or refit a total salon, we have found the same questions are asked almost every time.
The most common questions is – “what is the interest rate”? This is a very good question but in leasing it’s one not easily answered. Let me try to explain this with an analogy you may be familiar with…When you apply for a home loan, what you’re doing is looking to obtain finance for an appreciating asset – (one that increases in value over time). This reduces the risk to the lender because if they are forced to repossess the home for whatever reason, they have a greater chance of getting their money back. This is attractive to lenders so there is more competition between them which keeps interest rates fairly low – around 5.2% on average at the moment.
When you compare this to an asset that depreciates (loses value) very quickly and is very specialised (only useful to salon professionals) then the lenders are not as keen to lend on this equipment and the competition between them is greatly reduced. Salon equipment is considered to be almost valueless the minute it leaves the supplier’s door so it is considered high risk and there are actually very few lenders who will lend into the salon industry. Because of this, lenders only offer certain types of finance options and the most common are equipment rental or an operating lease.
A rental (or Operating Lease) is not provided with an effective interest rate, because it is designed primarily for equipment you’re going to rent and not own. Here’s an example: imagine you’re going to rent an apartment to live in and it costs $400 per week. You don’t then ask what is the interest rate do you? No, because you’re renting the apartment not paying off an apartment you will one day own. So instead of an interest rate, you’ll be given a weekly or monthly repayment amount. This doesn’t mean that when you rent through Relion Finance you will never own the equipment – you still may be able to own the equipment for fair market value.
At Relion we believe that it’s very important for our customers to be able to have the choice and security of owning the equipment at any time and we will always provide some options for this. Firstly, they you continue to rent beyond the fixed finance term for as long as you like (and we may even be able to reduce your repayments the longer you plan on renting – it’s worth asking!). Secondly we always provide an option to upgrade the equipment (at anytime during the lease), and thirdly we offer our customers the choice to pay out the lease at any time – you never know when you might find yourself with extra money. Finally, we offer the option to hand the equipment back with no further recourse at the end of the finance term.
Not all rentals are the same that’s why it’s important to work with a company like Relion Finance firstly because we understand the salon industry and also because we can tailor a suitable finance product that will best meet your business demands. If you’d like some help with that research or have any questions about leasing equipment please get in touch.
