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Should Your Business Buy or Lease Tech Equipment?

By Chris Waite

Aug

29

2014

Tech Equipment LeasingNew technology speeds up your sales cycle, simplifies customer transactions, and improves your processes. It also helps your business gain a significant competitive advantage through strategic use of information technology.

However, updating tech equipment can be a big expense.

Once you have decided to upgrade systems, the next question is: Should you buy or lease? The answer varies from business to business.

Leasing is a very good option for businesses that need to acquire computers, networking systems, and software. Leasing is how most start-ups equip their new business ventures. It’s ideal for the medical facility or clinic that wants to update diagnostic imaging systems. And it’s often used in the industrial sector to acquire innovative, leading edge equipment. Leasing works in most industries and applies to businesses of all sizes.

In making the lease versus buy decision, a good rule to follow is “if it doesn’t appreciate in value, don’t buy it”. Buying a property to house your business will almost always yield a return on investment. But buying 30 computer systems outright doesn’t work the same way. The downside of purchasing new technology is that it depreciates rapidly—leading edge equipment can quickly become obsolete. You will recoup only a fraction of the original investment when it’s time to update the technology.

If the purchase is relatively small, for example: you need a new computer setup for a new hire, then buying is likely the best approach. But if you need to outfit an office with 10 new systems, then leasing probably makes more sense.

When Should you Lease Tech Equipment?

Leasing is right for your business if:

You want to have the most up-to-date equipment now.

When you choose to lease you have the opportunity to take on equipment you weren’t able to afford at that moment in time. Leasing allows you to expand your equipment options, and gives you access to price points that were beyond your reach if you were to purchase. When your lease is up you can update your equipment to new, more advanced technology.

You don’t want to use your working capital.

In business, cash is king. Rather than buy used equipment or lower-end models to preserve cash, you can set your business up with leading technology at affordable monthly rates. Leasing is a smart way to make strategic investments in information technology without using up valuable capital.

To get an estimate on monthly lease payments for technology purchases you are considering, use our instant equipment lease quote calculator.

Do you have questions about the leasing process? Want to know what types of equipment you can lease? Or how leasing will affect your finances and taxes? Read our FAQs for important information or contact us with your questions.

Written by Chris Waite

Chris Waite

I started my career leasing hardware and software to the automotive market and later moved onto technology financing. I also founded Catalyst Finance in 2005 to focus on leasing and financing in the Canadian SMB space. Over the years I have seen technology play a big role in the equipment leasing business. I developed Sprint Lease to provide business owners with quick and easy access to online equipment lease quotes.