A short YouTube interview segment where Jayson Lowe advises business owners on equipment acquisition. Lowe argues neither leasing nor conventional financing is ideal because both transfer control and capital away from the business; he recommends financing via the "infinite banking concept" so owners retain control of capital and capture the financial roles (depositor, borrower, banker, bank owner).
Is it better to lease or to finance equipment?
Is it better to lease or is it better to finance equipment? I would say that neither one is the best option. If you're not in a position of total control. Here's what I mean. When you lease something, you're essentially making a payment for something that you'll never own. And every payment that you're making is passive income to someone else. And you never own that item that you're leasing. So either leasing is a great idea or the person who purchased what you're leasing is laughing all the way to the bank and they know something that you don't. And when you finance something that also involves making a monthly payment onto the books of someone else's system, you can't reuse the money. You can't earn interest on it again, it's gone. But everybody positions this with the business owner as a tax advantage. But we're thinking in terms of capital, not tax. The business owner would much rather have control of the capital, still mitigate their tax, but maintain control of the capital. We don't want money being transferred away from the company where it can't be used again. We want the business owner to be in a position of control. So when you finance the equipment, but you do that through the device of the infinite banking concept, you're never losing control of capital. You always have ready access to it. When a business owner hears that, they grasp it conceptually very quickly because they've all experienced the frustration and the tension of having to go the other route. Yes, you can lease things. Yes, you can finance things. Both methods involve a permanent transfer of money away from you. How would you feel knowing that you don't have to finance things that way and you can keep the money exactly where it belongs in your business. Our clients who are business owners tell us that that makes them feel pretty damn good.
So it sounds to me like you're saying the only way to make the laughing stop is to have actual control over the situation.
Well, look. Look at it from this perspective. You've got four characters in the financial play. You've got the depositor, the borrower, the banker, and the bank owner. The business owner is not one of the four characters in the financial play. The business owner is a of part borrower and the depositor. But the business owner is not the banker or the bank owner. And the character who's making the most money, understandably so is the bank owner. So you as a business owner, you're making a pretty decent living in whatever your business is but believe me, the banker and the bank owner are doing really, really good. Because you're making the wheels of their business turn. Because all your money is flowing through the books of their system, not yours, regardless of what business you're in. So when you put yourself in a position to become the borrower, the depositor, the banker and the bank owner, and in addition to that, you still own your business, you create a real, peaceful, stress free way of life financially and you keep the capital where it belongs in your business and you become the character making the most money. Understandably so. Is there anything stupid about doing that?
No.
Business owners got into business, they built a company because they want freedom. They didn't sign on to become a business owner so they could experience the frustration and the headaches of having to deal with some fat cat banker who needs to scrutinize every decision that they make as it relates to expanding and growing their company. That has nothing to do with creating more freedom. They want control.
That sounds like zero control to me.
Right. And so put yourself in the shoes of a business owner who's in a position of total control and I'll show you a business owner who's saying, man, what a peaceful, stress free way of life it is to handle these financial matters as it relates to my company.
