Business equipment: Whether to buy or lease?
Friday, January 9 2004
New and existing companies require expensive business equipment. Everything from copiers and printers to fax machines, telephone systems and digital scanners help owners and employees operate on a daily basis. All of these pieces of equipment can be quite expensive. According to local office equipment firms, an average imager or a basic copier can run anywhere from $300 to $5,000.
Businesses have the option of buying or leasing this equipment, and there are many determining factors that affect this decision.
A finance lease is a full-payout, non-cancelable agreement in which the lessee is responsible for maintenance, taxes and insurance. Finance leases are most attractive in cases where the lessee wants the tax benefits of ownership or expects the equipment's residual value to be high.
These leases are structured as equipment financing agreements with residuals up to 10 percent. The lessee purchases the equipment upon lease termination at a pre-agreed amount. The term of a finance lease tends to be longer, nearly covering the useful life of the equipment.
