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Leasing vs Out-Right Purchase


Leasing or out-right purchase?

Leasing involves sighing up to a hire agreement that allows you to hire the equipment for a specified period (after which it is reclaimed by the lease company). After that period you are able to up-grade to a new piece of equipment, thus keeping your equipment up to date and reliable. This is the most common way of getting an expensive photocopier or printer (usually anything over a £1000) as it allows you to spread the cost over a period of time, say 5 years; it is also more tax effective. Leasing is subject to interest in the same way as borrowing money from the bank or higher purchase.

Out right purchase is more expensive in the begging but can work out the better option in the long run. If you intend to keep your equipment for a long time, find it financially beneficial, need equipment that is less than £1000 or simply don't want the long term commitment of a lease, then out-right purchase is the answer.

The overall financial difference between the two options is surprising little over a 5-year period (usual lease period and considered useful life expectancy of most photocopiers). When you add in the overall interest paid on a lease compared to the out-right purchase price, any yearly tax advantage is almost cancelled out by the interest paid.

To sum up both options have their benefits it's simply a case of what suit your needs. Basically leasing allows you to spread the cost over a number of years with no capitol outlay. Out-right purchase on the other hand limits your monthly outgoings and means you own the equipment, and therefore can decide when to replace it. More information on leasing

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