Renting Vs. Leasing Computers A Comparison Of The Two Options

By | October 22, 2015

By SeanM Murphy

If your computer requirement is for a period of less than a year, renting a system from a computer rental company can be beneficial and a good choice. On the other hand, if your requirement is likely to run for duration of years, leasing or buying equipment should get serious consideration.

Advantages of computer rentals

— Flexibility: Rentals offer flexibility – they can be canceled or extended as needed at any point in time. A lease typically runs for a long, fixed time period.

— No penalties: Rentals can be cancelled without attracting a fine. Exiting a lease early, on the other hand, can attract steep penalties.

— Latest or advanced technology equipment: A computer rental company offers the most modern, up-to-date technology equipment along with the popular models. This means that you can rent latest equipment whenever you need and return once you are done with them. This can mean tremendous cost savings as against purchasing new equipment.

The rental solution is the best for short term needs, but is an expensive proposition over the longer term and if your requirement is extended, it is better to consider leasing or perhaps an outright purchase.

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The leasing option

For longer periods, such as one to three years, leasing usually makes more business sense if you don’t have the funds for outright purchase. This is especially applicable for small businesses.

Advantages of leasing

Leasing computer equipment offers many advantages including:

— Minimal initial cost: This is especially advantageous for companies that find it difficult to meet large one-time expenses due to paucity of funds.

— Easy disposal of obsolete equipment: Most contracts permit you to return the equipment to the leasing firm at the expiry of the lease. Another possibility is a purchase at fair market value if the equipment is of value to your company.

— Access to current technology: Rapid and continuous advances in technology have resulted in cycles of technology obsolescence. Leasing lets you update your equipment inventory at regular intervals to keep pace with the latest technology in the market.

— Lesser pressure on cash flow: Leasing spreads the cost of the equipment over the lease period. Expenses are predictable, thus making cash flow and budgeting much easier to handle.

— Debt as opposed to expense: Leasing costs are counted as expenses. A loan, in contrast, is considered a business debt. Variable expenses are more suitable than debt for good company valuation.

— Flexibility: Businesses change and grow and so do their equipment requirements. Purchases can burden your company with unsuitable or old equipment, whereas lease gives you the flexibility to select equipment that the business currently requires and update when required.

Leasing is not suited to the needs of all businesses, especially start ups or home businesses, who are uncertain of the future requirements. Assess your business needs and approach a computer rental company or lease firm to discuss your options before arriving at a decision. Also, do your estimates around cost benefit for each option to make informed decisions.

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