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Are you considering leasing arcade games?
It can be tough sometimes for small business owners to score arcade game financing.
Even Harder:
Go play some "Where's Waldo" on the internet and try to get real information about the process.
(It's easier to beat Ghosts & Goblins on one quarter....)
...at least it was....
Today we have a special treat for you.
We're going to spell it all out for you -
OH YEAH
When you look into business financing, it's really easy to be lied to.
P.S. This article will only talk about arcade game leasing for businesses.
P.P.S. If you're thinking about financing an arcade game for personal use, that's totally lame....
Business financing isn't very well regulated, so whether you're financing arcade games, pinball machines, or fixtures for your business, it can be really hard to get solid info.
You Want To Talk About Games?
Every single day we encounter a customer with a totally bogus "proposal" that basically says:
"Pay us a big deposit... ...then we'll ask you for more information."
You want to guess what happens next?
When you decline to pay way higher rates than was proposed, they say:
But like this:
Do you have good credit?
With good credit, things are pretty easy...
Here's the Deal:
If your credit is pretty good (like a 650 or above)....
...and you have actual credit history (at least a few years...)
...and reasonable size of credit lines..
(i.e. if you want to lease $50k worth of machines and you have a good payment history on $30k worth of previous borrowings)....
Sometimes.
When you see the rates though, it might be like this:
(We'll go over rates in just a bit, but...
...if you can just barely get approved...
...you might feel like one of those kids who just saved all day and turned in 600 tickets to win a pencil eraser...)
Just about every day, we get an inquiry or twelve from a dude that looks like this:
Would you lend money to this guy?
Neither will anyone else.
Here are the situations where someone with bad credit can score financing:
The formula is pretty simple.
Basically, a lease or loan company has a Magic 8 Ball...
The lower the likelihood of you paying...
(statistically - it's not a popularity contest)
....the higher the monthly payments will be.
Here are some examples:
So, yes, startups or people that have had trouble paying their bills don't get offered low-rate business financing.
(Why do you think so many leasing companies lie to you?)
Owners of established business with good credit don't do too much crying - because they get offered good rates.
The biggest issue we run into is with people with good credit just starting their businesses.
That's right - if you are starting a new business and your credit is good, you're going to be a total pain in the ass.
Here's why:
People with high credit scores think 12+% a year financing rates are high - because they are used to the "consumer lending" world.
Business financing = different.
Most. Businesses. Fail.
For that reason, when startup businesses tell us they might go through a bank this is what happens behind the scenes:
Seriously, though, if you can get bank financing, go for it.
(But don't come to us after getting turned down at 5 different places and then tell us the rates are too high....)
Here's the truth:
For most of the startup businesses we talk to (the ones that are smart, anyway) rates don't really matter all that much.
The average $8,000 arcade game generates $200 a week in sales.
Let's say you are acquiring 3 arcade games for $24,000.
Surely, you're way better than average, but let's just pretend you're right in the middle.
That $24,000 purchase should generate $600 a week in revenues, or around $2,500 monthly.
How Much Profit Could You Expect After Making Payments?
Most people we talk to like to do a 5-year lease - and if structured properly you can write off all the payments.
So, after deducting the payments, but adding back in the tax savings, how much profit are you left with based on different profiles?
[let's assume a 28% tax rate]
That's Pretty Good, Right?
Usually, we find that whether you fail or succeed has little to do with the payments on equipment.
If the numbers work, they work.
Right?
If you need to finance or lease arcade games for your business, give us a call at (866) 631-9996 or click in the picture below.
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