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Financing Options for Studio Time and Music Equipment

Financing Options for Studio Time And Music Equipment
Austin Kilham
Austin KilhamUpdated August 8, 2023
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Musicians need instruments, musical equipment, and studio time to perform and record their music. Yet, as many artists know, having enough cash to finance their endeavors can be challenging. In some cases, a loan can provide the cash upfront to jumpstart a project. However, cashflow for musicians isn’t always steady, and going into debt can have serious consequences if you don’t have the income to make loan payments on time. Here’s a look at what you need to know about when to finance a recording studio or musical equipment and other options to consider. 

Should You Finance Equipment and Studio Time?

When you borrow money, you either open a line of credit that allows you to borrow up to a certain limit that you pay back monthly, or you receive a lump sum of cash from an installment loan that you pay back in regular installments. Either way, your lender will charge you interest. Interest is the price you pay to borrow, and rates vary depending on the type of loan and your credit history. If possible, pay for studio time in cash. This is by far the cheapest option since you avoid interest entirely. However, not everyone has enough cash on hand immediately to fund their music project, so a loan or credit may be an option as long as they can afford it.

When You Should Apply for a Loan for Music

How do you know when applying for a loan for music is appropriate? First of all, do you have a steady income from another source and enough extra cash each month to make loan payments in full? A regular income can reduce the risk that you’ll default on your loan. If you know you have a series of paying gigs booked, a loan can front you cash to buy the equipment you need to play the show. You can then repay the loan when you get paid. Knowing when to pay for studio time can be a little bit trickier, since it’s not always clear how well an album will do when it’s released. If you have a solid fan base and have released albums in the past, you may have an idea of how much revenue you can expect to make from record sales. Work backwards from that figure to understand how much you could potentially borrow and pay back with sale proceeds while still turning a profit. If it’s unclear whether you will have the income to pay back your loan, it may be better to put off borrowing until your income is more stable. Delayed gratification isn’t always easy, but it’s better than defaulting on a loan and hurting your credit score, which can make borrowing — and a host of other things, like renting an apartment — more difficult in the future. Borrowing for individuals with poor credit scores can also be more expensive, as lenders tend to charge higher interest rates to offset the risk of taking on individuals who are more likely to default. 

What Studio Equipment Is Necessary to Start Recording?

If you’re planning to build out a studio of your own, you’ll need a few basics to get started. First, you’ll need a microphone to record. You’ll also need a personal computer, audio workstation software, studio monitors (speakers designed specifically for audio production), and an audio interface that links all of your equipment together. The equipment you’ll need will depend on what you hope to accomplish. For example, if you’re recording only one person at a time, only one microphone may suffice. But if you need to record a full band, you may need a handful of microphones to get you started. A recording studio loan can help you purchase the equipment you need. 

What Are Your Financing Options?

You have a few different options to finance your music equipment and studio time. First, you may consider putting it on a credit card. Credit cards are revolving credit. They allow you to spend up to a certain credit limit and pay it back each month. It’s best to pay off your card in full each month, but you will have to make at least minimum payments. Credit card companies tend to charge relatively high interest rates, with average interest rates around 22%, according to the Federal Reserve. If you pay off your card in full each month, you can avoid interest payments. But carry a balance, and your debt can get increasingly expensive. As a result, credit cards are best used when you know you can pay them off quickly. You may also consider a personal loan, which provides a lump sum of cash that you can use for a wide variety of purposes. Personal loans may act as recording studio loans, loans on musical instruments, and a way to finance studio equipment. Personal loans may come in all sizes, from small personal loans of $5,000 to loans upward of $100,000.You must pay back the loan in regular monthly installments, including interest. Interest rates for personal loans are much lower, on average, than credit card interest rates — 11.48%, according to Federal Reserve data for the second quarter of 2023.If you’re looking to start a recording studio business, you may consider taking out a small business loan from a bank, online lender, or the Small Business Administration (SBA). The SBA offers a variety of loans that can help provide startup capital, secure real estate space, and purchase equipment. Recommended: Guide to Financing Musical Instruments

Check Your Local Instrument Retailer for Financing Options

Some retailers that sell musical instruments and other equipment may have in-house financing programs that allow you to take the equipment you need home right away while splitting up payment overtime. These programs may offer 0% interest for a fixed period of time. Pay off your equipment in that period and you won’t owe any interest at all. However, buyer beware, when that time frame up is, interest rates may jump precipitously. 

Is Rent-to-Own Music Equipment Worth It?

Rent-to-own plans for musical equipment are designed to allow someone to lease an instrument, try it out, and return it at any time if it’s not the right fit. However, these plans can end up being quite a bit more expensive in the long run than buying an instrument outright. So, if you know that you need an instrument or musical equipment and you plan to buy it anyway, rent-to-own plans may not be a good option. 

Can You Finance Studio Time and Equipment Without a Credit Check?

Most lenders will want to run a credit check before they extend credit to you. They want to see that you have a track record of managing debt responsibly and paying your bills on time. Your credit score is a three-digit numerical representation of your credit history, usually ranging from 300 to 850. Lenders see individuals with higher scores as less likely to default on their loans. As a result, they’ll tend to offer these individuals loans with the lowest interest rates. Borrowers with lower scores are seen as more risky and may have difficulty qualifying for a loan. Those they do qualify for may carry higher interest rates to compensate the lender for the increased risk they’re taking on. It is possible to apply for loans that don’t run a credit check. However, these loans frequently carry relatively high interest rates and fees. The lender may have additional requirements, too, such as automatic deductions directly from your bank account for monthly payments. Recommended: Tips for Managing Personal Loans

The Takeaway

Buying instruments and recording music requires a certain amount of capital, but funding can be challenging. In certain circumstances, financing can help, either from credit cards, small business loans, or personal loans. Thinking a personal loan may be right for you? Be sure to shop around. Compare top personal loans with Lantern to find the best terms and interest rates for you.

Frequently Asked Questions

What are standard terms for equipment financing?
How do you finance music equipment?
What studio equipment can be financed?
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About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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