In today’s day and age, computer equipment is essential the success of millions of businesses. No matter if you have a small business or a Fortune 500 company, one thing will never change: computers can make the organization run much more efficiently.
Equipment Loans are Powerful
Along with computers, there are other types of related equipment that are commonly used by companies in a variety of industries.
Although the cost of computer equipment is decreasing, this does not mean that you will have enough cash to purchase everything you need. Additionally, you never know when the time will come to purchase/lease new equipment during an expansion phase.
When you compare leasing computer equipment to buying you will realize that there are advantages and disadvantages of both.
Benefits of Leasing
- Lower upfront cost
- New equipment more often
- Your equipment will always be up to date
- Predetermined monthly expense that never changes
- Keep up with your competition
Downside of Leasing
- You may end up paying more in the long run
- You are required to keep paying for the equipment, even if you stop using it
Benefits of Buying
- Easier than leasing – less paperwork required
- You make all the decisions in terms of maintenance
- All of your equipment is tax deductible
Downside of Buying
- The initial cost of buying new computer equipment may be too much at the present time
- You will eventually be stuck with outdated equipment
As you can see, there are pros and cons to both options. The only way to make an informed decision is to carefully compare the many details of leasing and buying. At some point, you may realize that one strategy better fits your company from a financial standpoint.
Questions to ask before Leasing
Most people are aware of what goes into buying new computer equipment. However, leasing is a bit more complicated. Here are several questions to ask:
- Is there a buyout option at the end of the lease?
- What type of lease are you signing – an operating lease or a capital lease?
- How long does the lease last?
- Can I terminate the lease early? What happens if I do?
- Can I add new equipment to an existing lease in the future?
When you ask these questions, while also considering the pros and cons detailed above, you will be armed with the information necessary to decide between purchasing or leasing computer equipment.
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.