If you are reading this article, then most likely you have been given the task of determining whether it is better for your company to lease an office printer and business copier from a provider of business equipment or purchase them outright. Most of the research that you can find online will talk about how both options can be good for different kinds of business and then will link conveniently to their very own copier leasing or copier sales website.
Business Equipment Lease Types
There are two main kinds of business equipment leases: capital leases and operating leases. Below we will go into detail about the significance and importance of each. It is important that you familiarize yourself with the following before you lease and business copier or printer for your commercial property.
- Operating leases: Most businesses use the operating lease option, which is also referred to as a fair market value lease since the monthly payments are lowered compared to a capital lease. Whenever a company has an operating lease on a business copier or printer, essentially, they are renting that equipment, so this asset doesn’t get added to the balance sheet of the lessee. Once the lease has ended, the lessee will have the option of purchasing the copier. However, the lessor calculates the buyout price based on market demand, new technology, wear and tear, depreciation, and agreement terms. It makes the most sense to have some operating leases when a business wants to avoid the hassles of owning a printer or copier and instead would prefer to continuously lease recent models.
- Capital leases: These are also referred to as $1 out purchase leases sometimes. For most businesses, capital leases are not as common as operating leases. When a capital lease is obtained on a piece of equipment by a business, it is more like getting a loan on money instead of renting equipment, with the principal and interest that is paid going towards the cost of the business copier and the equipment going on the balance sheet of the lessee.
Leasing Benefits Of Getting Business Copiers & Printers
- Avoid obsolescence: In the easy way that obsolescence can be avoided is to lease equipment, which for some companies is a non-issue and a major concern for others. Companies that only need to have basic copies and printers are not as much affected by obsolescence compared to those rely on printers that are highly specialized and that offer certain high-tech features they are looking for.
- Low upfront costs: Not only does leasing allow businesses to get printers to use at a low upfront cost, but it also helps them preserve their credit. Access to credit is limited for many small businesses and whenever possible they try not to use it; one way of doing that is to lease equipment.
- No hassles: Whenever printers are leased by a company there are no disposal or resale hassles to deal with. Leasing is convenient as well since maintenance plans are offered by most equipment providers, and the cost can be paid for separately or included as part of the lease. Companies that have limited IT staff frequently will choose to lease just for maintenance purposes.
Leasing Drawbacks Of Getting Business Copiers And Commercial Printers
- More expensive: Obviously if it was not profitable to lease equipment then there wouldn’t be a business for it. The lessee has to pay interest which is what makes it profitable. When the lease term has come to an end, a majority of lessees will end up having paid more than what the copier’s value is. Even in a rent-to-own situation, like with capital leases, usually, the lessee/eventual purchaser will end up paying more than what the printer’s market value is. Along with paying more for the printer’s actual cost, many companies end up overpaying on the maintenance plans also. When an equipment lease includes a maintenance plan, rather than being obtained separately, then the lessee pays interest on both the maintenance plan and copier.
- Locked into a set contract: It can potentially be negative for a startup or small business to be locked into a lease on a printer. Printing needs often evolve as the business changes, and a printer that a company leased when it had just 10 employees might not be adequate once their workplace has a staff of 75 people. Some business owners also overestimate what their copier or printer needs are and end up being stuck with an overly expensive lease.
Purchasing Benefits Of Buying Commercial Printers & Business Copiers
- Less expensive: purchasing a copier or printer almost always cost less compared to leasing them. Companies wanting to minimize the amount of interest that they pay for services and good usually choose to buy instead of lease.
- Recoup investment: Although a printer is a type of depreciating the asset, you can sell a used printer if you don’t need it any longer, whereas you can’t sell a leased one.
- No contracts: Whenever a printer is purchased by a company, they aren’t locked into any contracts.
- Flexible maintenance: Since the lessor owns the leased printer, the lessee is not allowed to perform any maintenance on the equipment. So that means the lessee has to rely on the lessor whenever anything breaks.