Acquiring new IT equipment for your business means shelling out big money for something that will likely need to be upgraded again in a few years.
Because it’s such a large investment of your company’s capital, determining whether to buy or lease IT equipment is a big decision. Each business’s needs are unique, so it’s important to consider the pros and cons before making your choice.
Leasing IT Equipment: Pros
- Easy to Upgrade. Being able to acquire the latest technology on a regular basis is one of the biggest benefits of leasing. Tech equipment becomes obsolete quickly, making regular upgrades vital. When you lease equipment, you are free to upgrade to the latest technology without having to lay out the expense of a new purchase every couple of years. Once your lease terms are up, you are free to move on to new equipment.
- Less Up-Front Expense. Leases rarely require a down payment, so in most cases you’ll pay nothing up front.
- Predictable Monthly Expenses. A lease allows you to break the cost of your equipment down into predetermined monthly payments, which can be easier to budget for than a large one-off expense.
- More Flexible Terms than Loans. Leases are often easier to get and offer more flexible terms than loans. This could be beneficial if you don’t have the collateral for a loan or if you need flexibility in when, how much, or for how long you make payments. (For example, you could negotiate for a longer payment plan to lower your monthly costs.)
Leasing IT Equipment: Cons
- Higher Long-Term Cost. Because you’ll pay interest and fees, leasing is almost always more expensive in the long run than buying.
- Obligation to Pay Through The End of the Lease Term…Even If You’re No Longer Using the Equipment. Lease terms will vary, but generally speaking you will have to continue making payments for the entire lease period, even if you no longer have a need for the equipment.
- Legally Complex. There are many different types of leases available, all with different rules, and leasing terms can be complicated to negotiate. Without proper negotiation, you could end up paying more for your IT equipment than you should or being responsible for exorbitant penalties if you pay off your lease early.
Buying IT Equipment: Pros
- Less Complicated Than Leasing. Buying equipment is relatively easy — once you decide what equipment you want to purchase, you simply pay for it and it’s yours. No fine print to sift through.
- Maintain or Resell on Your Terms. A lease will often require you to maintain the equipment according to the leasing company’s specifications, and won’t allow you to resell before the end of the lease period. When you buy, you determine your own maintenance schedule. Plus, since you own the equipment outright, you can resell it whenever you want.
- Tax Deductible Asset. When you buy IT equipment, it is considered an asset, rather than an operating expense (as is the case with a lease). The IRS allows you to deduct the full cost of newly purchased assets in the first year of ownership (see Section 179 of the IRS code or ask your accountant for details). With most leases, you can only deduct your monthly payment.
Buying IT Equipment: Cons
- Higher Up-Front Cost. When you buy, you will need to pay the full price of the equipment at once. If you don’t have the cash on hand, that may mean tying up lines of credit or taking out a loan.
- You Could Get Stuck With Outdated Equipment. Technology evolves quickly, meaning you’ll eventually have obsolete gear on your hands that isn’t always easy to get rid of (although Tech Dump can help with that…see below).
If You Choose To Buy, Tech Dump Can Help You Get Maximum Value From Your Equipment
Some might see ownership as a negative when it comes to IT equipment, simply because of the speed at which technology changes. But Tech Dump can help you get the maximum value recovery out of your owned equipment through refurbishment.
Learn more about how we work to extend the life of electronics here.
If You Choose to Buy, Partner With Tech Dump For Your IT Asset Disposition
We can also help you properly manage your equipment when it reaches its end of life. Safe and environmentally-sound recycling of your computers and other IT equipment is a crucial part of both caring for the environment and maintaining your company’s data security.
When you’re ready to invest in newer technology, Tech Dump can take care of your IT Asset Disposition. We are committed to the highest industry standards for asset disposition and proud to be R2 Certified and NAID AAA Certified.
Determining whether to buy or lease IT equipment is a choice each company needs to make for themselves, taking into account their specific needs and desires. If you do choose to buy IT equipment, Tech Dump can help you get the most value from it and properly dispose of it for you when it reaches its end of life.