The topic of leasing vs. buying is an age old one. Which is better depends on your unique situation. You need to assess the pros and cons to decide the best option for your business. It’s not always a simple answer,
but hopefully after reading this you will have a clear choice in which would be better for your business.
The following are some questions to ask yourself:
- How often does your business like to replace equipment?
- What is the benefit from efficiency of having new equipment vs. the cost of leasing it?
- How much of your business is involved with the piece of equipment? Is it a major piece of your business and how much will you use it?
- Are you more interested in saving money or having the newest technology?
Leasing Is a Sure Thing but More Expensive
Copier leasing and forklift leasing are two examples of equipment that is commonly leased. We will refer to them as such throughout this article.
Typically, only expensive items are leased. That is a fact at the core of leasing. Leasing takes the risk out of having an expensive piece of equipment breaking! It makes sense for a lot of businesses. Buying is more permanent. Buying can save your company money but is it worth the hassle of ownership?
Leasing Allows Your Business to Stay Current on the Newest Technology
A lot of companies can’t or don’t want to afford a major expense like a copier or a forklift breaking. When these things break down it means there’s a big repair bill to be paid. Equipment breaks more often as it ages. This can make the last few years of using the piece of equipment inefficient.
Who has been on a job where there is some old piece of equipment that is on its last legs? The thing spends half it’s time being repaired and the other half of the time frustrating the employee. It can end up costing far more in employee time, repair bills, and headache relievers to use old equipment.
Leasing allows your business to stay up on the newest technology. Technology is constantly coming out with something newer and more advanced. Tech manufacturers are always inventing something new because that’s how they survive. They need to come out with something new to get people excited enough to buy or lease new equipment. You don’t want to be the one stuck playing compact discs when people are jamming on their mp3 players, right? Of course not.
As a business, there are no excuses for lagging technology. Your competitors have the newest equipment. Take copiers, for example. If you’re faxing documents when your competitor has a sophisticated document management system integrated with their copier/scanner/fax machine/document management machine, you’re going to be left behind. They’re going to have the advantage.
Buying Equipment Brings Down Cost of Ownership
Leasing is a sure thing. You’ll know you have the new and up-to-date equipment. It provides a safety net. Naturally, new equipment doesn’t break as much as old equipment. However, you also know that your business is going to have a payment forever if you choose to lease. You are giving up the opportunity to get a lot of value out of the equipment.
Think of car leasing versus car buying. Most people buy their cars. That’s because leasing is more expensive. You can drive a car for many years after you pay it off. During those years, you’re getting a great value and bringing down your cost of ownership. The same is true for a forklift or a copier that your business has paid off. Buying saves money in the long run.
Once the debt is repaid, you’re bringing down your cost of ownership. The longer you own equipment the lower your cost of ownership is. Therefore, you can save a lot of money by buying rather than leasing. However, you can also get left behind in technology and face repair bills from aging equipment.
Patrick Torres is a writer for Costowl.com who frequently writes for business categories.