When deciding whether to lease or buy office equipment, several factors come into play to determine which is best for your business.
Leasing equipment can be an efficient way to avoid some of the pitfalls of owning equipment outright.
However, there may be some situations where buying may still be the preferred option. To help you decide which is most suitable for your business, we’ve included a detailed guide to leasing vs. buying equipment so that you can make an informed decision.
Pros Of Buying Equipment
The first, and most obvious advantage is that you have full ownership of the equipment. If you lease your equipment, on the other hand, it’s not yours; therefore, you can’t sell, trade, or easily upgrade.
You Have More Options
When you buy equipment, you have greater flexibility when choosing your hardware and software. You can choose from various vendors, models, and options to find the best fit for your business.
You have More Control
Buying equipment allows you to get what you need without having to worry about being stuck with something that is not compatible or does not fit your needs properly.
Cons Of Buying Equipment
Let’s take a look at all the potential disadvantages of buying equipment.
High Initial Investment
The biggest drawback of buying office/IT equipment is that you have to pay for it upfront, so your cash flow will take a hit (especially when the purchases are unplanned).
This may not be favorable to many businesses in the current economic climate.
You have to be 100% certain that you’ll need the technology/equipment in the long term. Otherwise, it can be hard to justify putting money into something you may not get longevity out of.
Risk Of Obsolescence
Technology is constantly changing. If your equipment becomes outdated, it might not be able to handle some of the more advanced tasks properly.
If your PBX and VoIP/SIP Phone Systems have never been updated, you could face performance problems.
You Are Responsible For Maintenance And Repair
As the buyer, the cost of ownership falls onto you. You may also be responsible and incur further costs if something goes wrong with your surveillance camera systems or any other purchased devices.
Pros Of Leasing Equipment
It can be challenging to keep up with the latest technology in today’s fast-paced world. New tools come into the market regularly, with some needing replacement before their warranties expire.
Here is a list of reasons why leasing business solutions may be better than buying.
Lower Upfront Costs
The biggest advantage of leasing is affordability for cash-strapped businesses. It gives you access to equipment without paying the full price upfront.
With a lease, you typically pay only a monthly fee over the lease term. This means less risk and less of a knock on your cash flow.
Flexibility In Upgrading
Lease payments can be amortized over several years. Your organization will have time to pay off the cost of upgrading before the contract ends. This allows you to upgrade more frequently instead of waiting until the end of your contract.
Lower Monthly Payments
Lease agreements typically have low monthly payments that are fixed for the duration of the lease so that you can plan your budget more easily. This affords you the ability to spend money on other areas of your business that may need attention, like marketing or staffing needs.
You May Have More Options
Leases offer flexibility in terms of what type of equipment you can get and how long it will last. Some leases allow you to upgrade or change out parts at no extra cost during the lease term. Others may charge a nominal termination fee if you decide to swap out equipment before the end of its term.
Cons Of Leasing Equipment
There are drawbacks to leasing IT/office equipment. It’s important to be aware of all the factors before making any decisions.
You Don’t Own The Asset
This can be a costly exercise, in the long run, seeing as you don’t own the asset, so you will have to incur the costs for the duration of use.
You Might Pay for Maintenance Contracts
Leasing may require purchasing maintenance contracts. If you don’t buy these additional services, you may be responsible for any repairs or maintenance required by the manufacturer.
Factors To Consider Before Leasing Equipment
When leasing IT/office equipment, there are a number of critical aspects to take into consideration.
The Cost Of The Lease Itself
Depending on your business, a lease might be more or less expensive than buying the equipment outright. Your choice of the lease term is also important because it affects what happens when the lease expires.
The Product’s Use And Lifespan
Let’s say you need a server that can handle today’s workload and has room for growth. Consider leasing a server with more processing power than you need now.
Does your business need additional hardware or software as it expands? Consider leasing equipment with flexible upgrade options that can easily be adapted to future needs.
The Service Provider And Support
Finding a reputable company that provides reliable services is paramount.
Look for companies that offer 24-hour turnaround on calls for repairs and maintenance requests. The best providers offer 24/7 technical support via phone or online chat.
Conclusion
While deciding between leasing versus buying equipment can be daunting, the benefits of leasing are substantial. Equipment leasing can help you grow your business, save time, and even reduce your taxes.
If you are interested in leveraging the benefits of leasing vs. buying equipment, contact Stellar Communications today. We have the best solutions in business telephony to scale your growth.
Stellar Communications, LLC offers lease financing services from GreatAmerica Financial Services.
GreatAmerica is a $2 billion national commercial equipment finance company. Incorporated in 1992, GreatAmerica has a staff of over 500 employees.
It is headquartered in Cedar Rapids, Iowa, and has offices in Minnesota, Georgia, and Missouri. GreatAmerica provides financing and consulting services in all fifty states and some U.S. Territories.
For information on leasing services, call 1-800-234-8787 or visit greatamerica.com
