As a dental professional, you want the very best tools and equipment so you can provide the best patient care possible. Chances are, you’re familiar with many types of dental technologies that have been developed over the last few decades, designed specifically to make your work more effective and efficient.
Dental equipment can be one of the most significant investments a practice can make. For a new office build, equipment may be built into the financing you already have for the new office. However, if you’re an established office looking to make an investment in advanced technologies, you’ll likely be seeking alternative financing routes.
With your investment, you’re looking for returns in optimized patient care and/or additional service offerings. So, if you want the latest in patient care, but you have to stick within your practice’s budget, what are the best ways to purchase new equipment?
While we are not a financial institution, as a dental equipment manufacturer, we have helped our customers for over 25 years find methods to purchase configured to their individual needs. One popular consideration we’ve offered through third-party affiliates is the option to lease equipment. Today, we’re going to help you navigate your financing options when considering a dental microscope for your practice.
The Upside of Leasing
We’ve discovered in some configurations, leasing is a viable option for practices ready to get started with using a dental microscope that they might otherwise not be able to afford outright. Many leasing services provide competitive monthly payments with only the first payment required in advance.
With a finite leasing period, you and your staff can see how integrating this technology into your workflow improves your efficiency and expands your clinical applications. Leasing breaks out the initial cost into monthly payments, which is particularly helpful during the first few months while training your staff on the equipment.
With a minimal upfront investment, you and your staff can spend the time necessary to train and evaluate the dental microscope. Plus, we often hear from our customers on leases, their monthly payments can be offset through scheduling and completing just one additional endodontic or restorative procedure each month.
Compared to a conventional loan, many leasing services are categorized as Asset Based lenders. These services can secure a lien on the items you finance, without placing a blanket lien on your practice. Blanket liens cover everything in your office, including things like accounts receivables, which can get a bit tricky down the road. Additionally, conventional loans are very difficult to get subordinations on, so you may be restricted to only use that bank for future purchases.
Comparing Leasing to Loans
When comparing leases to conventional loans, your practice needs to consider current interest rates and evaluate term lengths. The typical minimum term period for both leases and loans is two years, which allows ample time to train on and try out your dental microscope. It’s also important to find out if your manufacturer works with any financial providers who can offer discounts or low to no interest payment periods.
When comparing leasing and loan providers, use the same term lengths, such as a 36-month lease agreement with today’s interest rate compared to owning the equipment for 3 years, which would potentially include future upgrades to your equipment. Payments will vary depending on the term length.
Sample Monthly Lease Payments
The below chart utilizes sample data to compare monthly payments based on your selected term length. These are based on current financing rates and are subject to change:
Terms & Rates of Equipment Loans vs Leases
What Happens After a Leasing Period?
The answer to this question greatly depends on your leasing provider. In general, there are two primary leasing agreements: Conditional Sale contracts and Lease contracts.
In a Conditional Sale contract, the Title transfers to you at the end of the initial term. Effectively, you’re leasing to purchase your equipment with your investment broken into monthly payments instead of funding upfront.
In a Lease contract, at the end of the agreement, you can expect to pay Fair Market Value for your equipment, estimated around 10% of the original value.
Estimating Return on Investment
Knowing the total cost of ownership is important for comparing leasing vs buying. Next, understanding the number of billable cases your microscope can assist with in a given time frame will help you realize your break-even point on your investment. For many getting started with a microscope for the first time, this can be difficult to determine, particularly in the first 4-6 months of operating and training on a microscope.
As an additional consideration, it can also be helpful to know that most dental microscope manufacturers, including Global, offer entry-level scopes with compatible upgrades for future use. This means you can purchase a functional scope without premium upgrades so you can get started at a lower price point and upgrade in the future as needed. As you become more familiar with using the scope, you may decide to add on additional options and features later on.
For more on the topic of price and upgrades on a dental microscope, read our article How Much Does a Dental Microscope Cost?
Tax Benefits on New Equipment
Section 179 of the IRS tax code, designed to encourage small businesses, such as dentists and dental specialists, to invest in their practices, allows them to deduct the full purchase price of qualifying equipment and/or software that has been purchased or financed during the tax year from their total gross income.
This means (as it’s currently stated) you can write off the full purchase amount this year and are no longer required to depreciate the equipment over time as they have in previous tax years. And while you are allowed to fully deduct the cost of some newly purchased assets in the first year, your company can also choose a Conditional Sale lease contract and still take advantage of the Section 179 deduction each tax year.
When considering tax benefits, know that tax laws vary from state to state and are revised regularly. We recommend doing your research, then speaking with a tax professional to understand all the financial implications before you make your decision.
Financing major equipment purchases are a major consideration for any practice. Your decision whether to lease or purchase a dental microscope can vary based on your unique configuration.
This is particularly true for those getting started with a microscope for the first time in their practice, considering its a new technology and its use will depend on the comfort level of your staff and the integration into your workflow.
Leasing will help offset the initial investment, broken into monthly payments, which helps you take the time to train and evaluate the microscope. Purchasing makes you eligible for greater tax benefits, and makes you the owner throughout the lifespan of your equipment. Your ownership can also begin with entry-level features that can be customized over time as you use your scope.
Ultimately, consulting a financial advisor will help you compare these two options. We can also put you in touch with third-party leasing providers to help you gather more information for your comparison.
If you’re considering adding a microscope to your practice or you just want to learn more about utilizing a dental microscope, we are here to help! Please feel free to reach out at 800-861-3585 or by clicking the button below.