Leasing equipment: a rough guide

In the current climate, sometimes leasing equipment is the best option for a business. And sometimes it isn't.

Leasing office equipment is an important consideration in the contemporary office space. According to the Equipment Leasing and Finance Association (ELFA), approximately 80 percent of United States businesses lease some or all of their equipment. For this reason, it’s no surprise that an increasing number of leasing agencies are making the most of this demand.

For some businesses, leasing is a necessity. It often makes more sense economically in the fast-paced tech environment, where technology becomes outdated almost as soon as it hits the market.

“Leasing is an excellent hedge against obsolescence,” explains an ELFA spokesperson, “especially if you’re leasing something like computer equipment and want to update it constantly.”

However, there are a number of considerations a company should take into account before making the decision to lease. For instance, the kind of business you’re in will absolutely determine the practicality of leasing. If a very small number of, say, computers are required, it might make more sense financially to purchase. However, if a large team of computer users are essential to your business, leasing might be a highly sensible solution.

By leasing, you can look forward to benefitting from tax advantages, lower monthly payments than you’d get from a loan, a fixed financing rate (as opposed to a floating one), and no expensive down payments. The immediate access to upgrades and the most up-to-date business tools is also a huge plus.

There are, of course, drawbacks to leasing. The price you pay over long periods may exceed that which you’d pay should you purchase your own equipment. Leasing commitments are also an issue, especially if your business runs into some financial turbulence. And then, of course, there are the conditions of the lease – you may find yourself needing to make important hardware upgrades that could violate the conditions of the lease.

There are a host of points to consider before you make the decision to lease. The primary concern is, of course, a financial one. Will leasing have a positive fiscal effect on your business – especially when starting out? How immediate will the savings be? If savings are good for short term, make sure you don’t end up paying big time for a poor decision later on. For this reason, the best course of action is to sit down and really scrutinise the conditions, rates, and market average before signing up for anything.

Consider purchasing the equipment outright – you’ll quickly determine which route is the most financially beneficial for you and your business.

Kitting out an office space is stressful and expensive at the best of times. The continuing trend for serviced offices – that is, offices that are leased with many considerations already taken care of – takes a lot of the strain out of establishing an efficient office space. By consolidating all managerial responsibilities and overheads into one dedicated business centre space you’ll save a lot of time and money in both the long term and the short.