LEASING AND FINANCING
If you’ve never leased technology before, you might be apprehensive toward it. That’s understandable, because there are many misconceptions about it. It’s important to understand that leasing technology (hardware, software and services) is different than leasing a car or a home. Vehicle and home ownership are better than leasing or rental options because you gain equity from those purchases. However, with technology, all you get out of ownership is outdated equipment and the hassle of disposing of it. In one statement, the value of IT equipment is in using it; not owning it.
- Cash Flow. The biggest advantage of leasing IT equipment is that it helps you to acquire technology with a minimal upfront expenditure. Basically, you get the technology you need without significantly affecting your cash flow.
- Tax Benefits. A second advantage is that your lease payments can typically be deducted as business expenses on your tax return*. Section 179 of the IRS tax code provides many advantages, but you’ll have to ask your tax consultant about that.
- Obsolescence. If you’re not familiar with this term, it refers to the moment when you’re stuck with old, outdated IT equipment. With leasing, you can use a variety of end-of-lease options or pass the burden of equipment disposal to your lessor when your term is up. This frees you up to lease new, updated equipment when your lease expires.
There are two lease/financing options that are available. These options include the Standard Lease and the Finance Lease. Below are explanations of each one:
- Standard Lease
- Finance Lease
If you want to keep your technology current, the standard lease is the best fit and it also has the lowest monthly payment. Because technology rapidly depreciates, the value in IT equipment is in using it, not owning it. It also provides the greatest amount of flexibility at the end-of-term.
Initially, many customers want to keep their equipment. However, at the end of the term, they realize how far technology has advanced and they are left behind with obsolete equipment. It’s important to determine your specific needs before choosing a lease/financing option.
There are a lot of other benefits like low, predictable payments, total solution financing (hardware, software and services), credit preservation and convenience.
If you want to know more about the benefits of leasing, contact a Finance Leasing Specialist at firstname.lastname@example.org or call (866) 469-7111.
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