Leasing for gym equipment suppliers
This article is written for suppliers of gym and fitness equipment who are looking for a leasing company to partner with. If you are a customer looking to lease gym equipment, we have many other interesting guides and blogs that will hopefully help you, check out our ‘lease gym equipment‘ page. However, if you are a supplier of gym equipment, please read on.
Choosing a gym leasing company
Just put gym leasing company into Google and you will see there many leasing companies wanting to partner with you. Leasing companies like working with gym suppliers, we will go into the reasons why when we talk about the lease penetration rate for fitness equipment suppliers.
You have a few options:
- Working with a “bank.”
I say bank, I am referring to a leasing company that lends its own money. The technical term is a lessor, at WestWon we call them finance companies. The benefit of dealing with a lessor directly is they sometimes have cheaper rates, they are normally bigger well financed organisations. You would also be dealing with the company that lends the money, not a middle man, i.e a leasing broker
- Working with a broker
A leasing broker does normally not lend their own money. However, saying that, lots of brokers now do write leases using their own lease paperwork and cash. Brokers by default work with a range of banks. A broker makes their money by increasing the interest rate. These fees are normally paid all upfront to the broker when the deal goes ahead.
What’s the best, working with a bank or a broker?
WestWon are a broker, we have been lease brokering for nearly 30 years. If you go to a bank directly, will not make any profit from your account. Hence, we will be biased!
However, lets explain why working with a leasing broker like WestWon makes good sense:
- The finance company may be fully committed to a customer, i.e. they have lent to a gym but will not wish to lend again
- The finance company may be happy to lend £20,000, but not the full £50,000 your customer is looking for
- They might be asking for personal guarantees where a broker will get the deal funder without them
- We will write about £25m of leases in 2018, hence are able to negotiate good rates in the first place based on this volume of business. If a supplier was only doing £500k of leasing per year, potentially spread across a couple of finance companies, the rates – on average – will be more expensive
- People compare interest rates, however, when you look at a 10% rate compared to an 11% rate, the difference on a £10,000.00 lease over three years, is only £4.40 per month
And the biggest reason to use a broker as opposed to a bank finance company direct…
Brokers will on average work a lot harder to win a deal and offer a significantly better customer service. With a large finance company, your account and customer will be a much smaller fish in a much bigger pond. You will normally experience better communication dealing with a broker as opposed to a finance company.
What is the lease penetration rate in gym leasing?
We refer to the “lease penetration rate” in a supplier or market sector. In vehicle and car finance, 74% of cars are leased in the UK, this is a high lease penetration rate. 10% of computers are leased, this is relatively low. With gym equipment, the lease penetration rate is about 25%, meaning one in four end user customers will lease. Hence, leasing companies know that circa 25% of your customers will lease gym equipment.
It makes more sense for a leasing company to build a relationship with a gym supplier compared to other markets as a higher percentage of your customers will lease.
Leasing companies like leasing fitness equipment
Apart for the health and fitness benefits using gym equipment does for the world at large, gym equipment has some form of resale value in the event a leasing company has to take it back. It means they are able to reduce their potential bad debt exposure compared to a computer or photocopier as an example.
Please give us a call on: 01494 611 456 or send us an email to hello@westwon.co.uk. We look forward to hearing from you!
