Let's consider a $100,000 bindery investment financed over 6 years.

At current rates, around 7%, the monthly payment would be about $1,800 (last year's rate of 9% would have cost you $100 more per month).

If we decided to leave an $15,000 unpaid portion until the end (loan with a balloon, or a fair market value lease), we would pay about $250 less per month, and about $2,950 more interest over the term. In other words, we spend $3,000 LESS DURING the term, but $3,000 more overall.

The advantages (ignoring tax considerations which are individual) of a balloon loan or FMV lease may be something for you to consider:

A. Pay with cheaper dollars in the future.

B. Improve cash flow over the term of the financing.

C. Have the freedom to keep, or return the equipment (FMV Lease)

Another aspect to consider is term. On that same investment a 4 year term would yield a $2,395 monthly payment, but the total interest paid drops by almost $8,000.