How long do you expect a laptop or desktop computer to last? Two years, three years or maybe even four years? What about your server systems? Three to four years? How much does it cost you to maintain all those systems including drops, breaks, coffee spills and other interesting mishaps? If you're tired of throwing major money into your IT infrastructure every three to four years, try leasing and free yourself of those big money payouts that deplete your profits.
Leasing costs you a bit more than outright purchasing, but keeping your money with you has its advantages. You'll also save money on unexpected maintenance issues that crop up by purchasing a manufacturer's warranty that includes onsite repair and accidental damage to laptops and amortizing those costs over the life of your lease.
Companies don't offer lease extensions, but at the end of your equipment lease, you may purchase the equipment for approximately 25 percent to 35 percent of its current market value. At the end of a three-year lease, the price will likely astound you, since three-year-old hardware has lost most of its value. Another option, if you don't want to continue its use, is to purchase the hardware and donate it to receive a tax deduction.
Advantages of Leasing
Leasing allows you to purchase equipment that you might not have the cash to purchase all at once. It also allows you to keep your money with you where it counts. There are tax advantages to leasing: The payments and interest may be tax deductible, thereby reducing the amount you pay for that lease.
Computer equipment notoriously loses its value quickly, and leasing it puts that loss on the company leasing the equipment to you. Leasing also allows you to refresh your equipment with regularity. A three-year lease often means comfortable monthly payments and a technology refresh before the hardware's performance approaches unbearable. Only opt for a 48-month lease if you can't afford the higher payments for a 36-month one. Four years is a long time to spend with the same laptop or desktop.
How Much Does It Cost?
Lease options vary widely depending on your credit rating, the length of lease, the amount of equipment leased and the company from which you lease your equipment. I selected equivalent* Dell, HP and IBM equipment pricing and lease options for this comparison survey. No lease information is available from IBM or Lenovo, although I'm sure they do provide that option. Lease amounts shown are for 48-month leases.
Laptop Specifications: Dual Core Intel CPU (T7250) 2 MB L2 Cache 800MHz, 2GB RAM, 160GB disk drive, Wireless and LAN, 15" screen.
When Leasing Isn't a Good Option
If your credit isn't top-rated, leasing will likely cost you much more than you'll want to pay, since your interest rate will be unreasonably high. Don't pay with a credit card unless you just want to buy some time and you pay off your balance every month. You're better off buying a little at a time rather than racking up credit card interest.
You're also not doing yourself any favors if the interest rate on your lease is significantly more than what a bank would charge. When you're facing double-digit lease interest, turn to a bank or pay cash for what you need. Everything is negotiable, even if your credit has taken a beating during poor economic conditions. Try offering a down payment to lower the lease payments or the interest rate you'll pay.
Cover your assets, put a smile on your accountant's face and keep your credit rating high, your lease rates low, your money in the bank, your allowable tax deductions coming and your hardware fresh with equipment leasing from your favorite manufacturer.
* Approximately equivalent hardware and options. Each manufacturer has its own set of specifications that differ slightly from one another.
** HP offers free upgrades from 2GB RAM to 3GB RAM and 160GB disk drive to 250GB disk drive.
Ken Hess is a freelance writer who writes on a variety of open source topics including Linux, databases, and virtualization. You may reach him through his web site at http://www.kenhess.com.