To purchase or lease? The eternal question we all face before we get a car or choose a property! But it’s an equally relevant question if your company needs to acquire hardware or renew its IT infrastructure.
First, let’s make the distinction
Leasing involves monthly payments of a predetermined amount for the duration of a contract. Thus, the equipment does not belong to you, but it can be upgraded more frequently.
Purchasing requires paying a greater amount all at once, but you don’t have recurring payments. You own the equipment and you are free to do with it as you please.
Both options have their advantages and disadvantages. To make the right choice, you need to understand your company’s needs. You can then weigh the pros and cons before you start leasing or purchasing your IT equipment.
Advantages and disadvantages of leasing
The first benefit of IT equipment leasing is obviously the lower initial cost. Payments are spread out each month, so it’s much easier to plan for it in your budget. Depending on your lease, your IT infrastructure can be upgraded after a specified period of time, every two or three years for example, so you are always using the most current technology.
On the other hand, leasing is often more expensive in the long run because payments continue over many years. Since leasing involves a fixed legal agreement, you may be forced to lease your IT equipment for longer than your real needs require.
Overall, leasing is better suited for start-ups. They are likely to have to expand their IT assets rapidly to match their own growth. Media and entertainment companies also have a strong interest in leasing because they need high-performance equipment that will be upgraded regularly to remain agile and competitive.
Advantages and disadvantages of purchasing
If you prefer to purchase IT hardware for your business, it is because you want to maintain complete control of your infrastructure. This is one of the main advantages for outright purchase: everything belongs to you. So you have the option to modify the equipment as you like and sell it whenever you want. This method of acquisition facilitates management, especially because there is no recurring payment and you avoid all the paperwork and conditions related to contracts.
On the other hand, as you can imagine, the major disadvantage is the initial purchase cost. You have to be in the financial situation to be able to pay a large amount all at once. Not to mention that you will have upgrade costs whenever your IT equipment needs to be refreshed.
To summarize, if you have the funds at your disposal or you have access to financing at a reduced rate, opt for the purchase rather than the lease option. In the long run, you will definitely save. Moreover, in the first year, you will be entitled to significant tax deductions for the acquisition of computer equipment, not only for monthly payments.
It’s all how you slice it
Several criteria must be considered before making your final decision. It all depends on the financial situation of your company, the size of the investment, the use of the equipment and its upgrade cycle. If you cannot afford a substantial one-time expense or if your company needs to renew its IT infrastructure frequently, as in the media and entertainment industry, prioritize leasing.
If you cannot afford a big, one-time expense, then consider leasing. But if you want to keep your equipment for several years, then outright purchase is the right solution. You will always be able to upgrade it over time by changing its components, such as video card, RAM, or storage.
In any case, do not hesitate to consult one of our experts. We can advise you on the most suitable choice for your business — whether it’s leasing, purchase, or a mix of both. IT infrastructure is a major investment. Make sure you have all the tools you need to make an informed decision.
This post is also available in: FR