Financing your digital dental practice: options for purchasing new equipment

08. July 2022

As dentistry is evolving, more and more new devices are entering the market and opening up new possibilities for dentists. Patients in particular benefit from increased comfort during treatment. In order to keep up with the competition, regular equipment purchases are essential. As a result, financing often proves to be a major challenge, especially for smaller dental practices. However, there are many more options than a classic bank loan.

Four different options: loan, rental purchase, long-term rental, and leasing

Dental equipment often tends to be costly and its purchase can only rarely be covered by a dentist’s liquid assets. The decision of whether or not to buy new equipment should therefore be carefully considered. Economic criteria play a crucial role in this decision. What is the added value of the new device? Is it profitable for your practice in the long run? A classic cost-benefit analysis as well as a detailed financing plan are highly recommended.

Probably the most common type of financing in dentistry is the traditional loan from a financial institution. A loan gives you immediate financial leeway to finance the equipment you want. However, high interest rates often act as a deterrent. As a result of long redemption periods, people often pay considerably more than the actual equipment purchase price.

Rental purchases offer a similar option. In this case, monthly rental installments are paid to the seller. Economically speaking, the equipment belongs to the practice once you have paid the first installment. Thus, the asset will be capitalized in your asset portfolio and you will need to list the equipment on your balance sheet. From a legal point of view, the device only belongs to you once you have paid the last installment.

Long-term rentals may also be of interest to some practice owners. In general, the equipment is leased for a period of between 36 and 84 months. After that, it must be returned to the lessor. You can also agree to purchase the device after that period. One advantage is that you do not have to pay the full cost of the purchase. Especially if you expect to replace the device with a newer model after the rental period, it is more economical to resort to this option.

Perhaps the most flexible financing option is a lease. In contrast to long-term rentals, leasing periods are significantly shorter. Apart from that, leasing includes different additional services such as maintenance, repairs, or insurance. Of course, these options depend on the individual contract. Leasing also differs from rental purchase in terms of tax law. In leasing, the ownership of the equipment never shifts to the leasing party (i.e., dentists). This will influence your tax return, as the costs can be fully deducted as business expenses.

Individual financing solutions for your dental practice

Carefully thought-out cost pre-planning is part and parcel of the financing solution for your dental practice. In this regard, it is advisable to seek help from experts such as tax consultants. Depending on the particular financial and economic situation of your practice, different solutions may be suitable. Whether buying, leasing, or taking out a loan: there are always advantages and disadvantages. The key here is to consider the pros against the cons in the context of your individual situation to find the most profitable option for you.

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