Compared to loan interest rates, do typical interest rates on computer lease make leasing worth it for a business?
Computer technology is fast becoming one of the best ways to accomplish anything you need done. Just about every home has at least one computer in it, and they are used for everything from networking to entertainment and business.
Businesses are almost guaranteed to have some kind of computer system to allow them to get most of their work done. From getting your bookkeeping done to managing customers and employees, every business is guaranteed to have one.
Some businesses depend heavily on their computers however, providing a service directly from their computer technology. Any form of Information Technology businesses are good examples, but there are other companies like restaurants that do need some computers to keep track of how many tables are being used.
Either way, there are many businesses that need to get their hands on computer equipment, but every business takes its own path in how they get it. In other words, depending on your equipment need and financial situation, which is the better way to get your computer equipment: leasing or bank financing?
When it comes down to it, do the typical interest rates on computer lease or bank loans provide companies with more of an advantage?
The Process of Purchasing a Computer
The best way to determine how you should acquire your computer equipment is to look back at any time you bought your own computer. Most people who buy computers use them for many hours in a given day, but computers in a business are used much more often generally, meaning they won’t last as long.
Whether you buy your computer for yourself or your business, it’s guaranteed to only last a certain period of time unfortunately. When you first purchased your computer or laptop, you probably spend hundreds of dollars on it, but it’s a personal computer and you’re only making the one payment so it’s no issue.
You use it for a few years, getting everything you need done, but after a bit it’s going to start running slower and losing its quality. There are ways to prolong the computer’s longevity, but eventually it’s going to break to the point where it’s just financially wiser to buy a new computer.
Generally this takes somewhere between 3 to 5 years for laptops, depending on how well you take care of it, but the point is you’re going to have to pay again to get another computer. For a personal computer, it’s no issue: you pay that amount every few years for one computer, and you’re set for a while longer.
However, with a business with a tight budget that needs ten to twenty computers, constantly being used, and they all need to be top-notch, the issue becomes different.
Advantages to a Purchase
There are advantages to buying equipment for a business; namely the fact that you get to claim it as a business asset and get some funding for it. Many argue that purchasing is better for a business because you only have to make the one payment and you’re done, but this couldn’t be farther from the truth.
The fact of the matter is, if you’re running a business and purchasing your equipment, you’re going to have to pay to replace it every few years. In some cases, that’s no issue: for restaurants, paying every once in a while to replace one computer is nothing.
But when you’re business needs a handful of computers, that replacement is going to cost thousands of dollars! Even a few years in, your business is just starting and this kind of financial burden can be unbearable.
Getting a loan can be even worse, because even with a low interest rate, a large sum of money loaned means the amount you owe is going to skyrocket. Plus, what if you still have that loan when it comes time to replace the equipment?
All you end up doing with high-risk loans is digging yourself deeper into debt, especially on equipment that isn’t permanent.
Typical Interest Rates on Computer Lease
Many businesses consider leasing to be a more viable option with expensive equipment purchases because they can get everything they’re going to need without spending so much at any given time.
Leasing means you pay a monthly rate to have equipment loaned out to you for a few years, and that rate is both low and flat. In other words, the typical interest rates on computer lease is zero, and the payments are extremely manageable for any businesses as opposed to large payments.
Plus, leasing offers you advantages like tax benefits and upgrades on equipment. At the end of a lease, you can even purchase the equipment at a haggled rate from the leasing business, or just continue the lease and get your hardware upgraded.
Leasing is designed to be advantageous for you if you’re in any situation where you have an equipment need. To learn more about typical interest rates on computer lease, click here.