Deciding to Lease or Buy Technical Equipment
Whether it is to use in business or your home life, technical equipment is an increasingly necessary part of our modern world. You have a clear choice about whether you should lease or buy this equipment, and there are some pros and cons to each approach that we are going to discuss here.
The first advantage is that you don’t have to foot the high upfront cost of buying the equipment directly. Computer equipment is upgrading at a rapid rate, and if you need access to the latest equipment all the time, leasing may be the more financially prudent approach. This is likely to be particularly beneficial in business settings. You will also have an arrangement with clearly defined monthly payments. Often, you will pay nothing upfront, which is useful if you are running a business with low cashflow. You also have the opportunity to take on a ‘try before you buy’ approach, as well as an increased ability to keep up with your business competitors.
The most obvious downside is that you will have to pay more for your equipment in the long-run and you are not going to keep it at the end. So, if you are planning on investing in an item for long-term usage, the best option may well be to buy if you can afford it. Also, you will find yourself locked into an agreement in which you have to keep paying – even if you no longer need or use the equipment yourself. This can present a major financial headache which you have to be wary of.
Buying is the more straightforward approach and the one that requires less paperwork. Leased equipment often involves you having to justify how you will use it, and you may find that the terms are tough to negotiate. If you are not skilled in the art of negotiation, you may find yourself with an inferior deal. You can also maintain the equipment yourself – potentially using a parts supplier like Octopart –and you will not be locked into an arrangement in which you have to agree to the leasing company’s repair structure. Finally, if you run a business, the equipment is likely to be tax deductible.
Of course, there are some cons involved in buying equipment too. Firstly, you have the high upfront cost, which you may be able to get around by entering a payment plan, but this will also end up costing you more in the long run. Without a doubt, the equipment will eventually become unusable as it breaks down or simply becomes obsolete as new technology comes along to replace it. You may have the option of resale, but for a much-reduced rate. Alternatively, you will only have the options of donating or recycling the products.
The choice between leasing or buying technical equipment can be challenging, but hopefully, we have helped to simplify it somewhat by weighing up the various pros and cons.