The Pros & Cons of Leasing Computer Equipment
Computers and other tech equipment can be expensive to buy outright, so many business owners seek other options such as leasing equipment. When you lease equipment, you sign a contract that obligates you to pay a certain rental cost for a set duration of time. There are many advantages and disadvantages to leasing computer equipment.
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Upfront Costs
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The upfront costs of leasing computer equipment are low. A top-of-the-line computer can cost thousands of dollars, but the cost to lease a computer might be less than $100 a month. Low upfront costs can allow smaller businesses to use expensive equipment that they might not be able to afford otherwise.
Total Cost
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The total cost of leasing computer equipment over the course of several years can exceed that of buying equipment. When you buy equipment outright, you have the option of using it for several years and then selling it to recoup some of the initial costs. The duration you use the equipment will ultimately determine whether leasing is more or less expensive than buying. If you only plan to use a computer for a year or two before upgrading, leasing may save money.
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Obsolescence
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Tech equipment tends to become obsolete very quickly. A top-of-the-line computer today might not be adequate for a business's needs five or 10 years in the future. Leasing computer equipment allows a business to keep computer equipment up-to-date. For example, if you lease a computer for a year, you can lease a brand new one next year, so your computer will never be more than a year old.
Maintenance
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Computers require frequent maintenance to keep them running smoothly. When you buy your own computer equipment you must maintain it yourself. This can be an advantage if you are tech savvy and want complete control over your computer's maintenance, but it can be a drawback if you do not know how, or do not have time, to maintain computers. If you lease equipment, costs associated with equipment that breaks down or malfunctions may be absorbed by company that owns the equipment.
Advance Payment
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While upfront costs for leasing are lower than buying, leasing can involve upfront costs. According to UK Business Link, "you may have to put down a deposit or make some payments in advance." In many cases, however, you may not have to pay any upfront costs for leasing.
Complexity
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Leasing is more complex than buying equipment because leasing involves signing a legal contract and making multiple payments. When you buy equipment, all you need to do is pay for the full cost of the equipment one time. When you lease, your use of equipment is governed by the contract you sign and you must make recurring payments.
Tax Deductible Equipment
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Another drawback of leasing is that if you buy equipment you may be able to deduct its cost from your taxes. According to Entrepreneur, "Section 179 of the IRS code lets you deduct the full cost of newly purchased assets, such as computer equipment."
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