Computer Equipment Leasing

With the constant advancements in the field of computers, one of the effective measures to avoid obsolescence is computer equipment leasing. Both the software and hardware markets are constantly buzzing with new technologies every now and then, which can make the earlier ones outdated with the blink of an eye. Generally, the computer equipment tend to become obsolete in 3 to 4 years leaving no option but replacement, in order to sustain business. To tackle this chronic hassle of updating, most of the companies today opt for leasing, which offers a very attractive means of cutting down the expenses. Leasing equipment is a common practice among business owners in the U.S. In a company, approximately 40 percent of the equipment is leased and about 80 percent of businesses lease some of their equipment.

The prime motive of any business is profit and the businessman always aims to maximize it. Today in every company, whether small or large, computers are required in order to maintain data, monitor the process flow and to do various other jobs. Today, it is almost impossible to run a successful business without the help of computers. With the arrival of a more sophisticated technology, a change in the whole infrastructure of computer network and peripherals becomes necessary.

If an organization decides to replace their existing technology with a new one, leasing is a better option than buying; in order to save money. It does not tie up one's personal or business credit, the way purchase does, and helps to get updated equipment more frequently. The organization may lease equipment like PCs, software, peripherals, network hardware, backup systems, copiers, etc. for a given time period. By the end of the lease, the organization can decide whether to purchase it or replace it with a newer technology. In recent years, many companies, government offices and non-profit organizations have been benefited by equipment leasing. The basic steps to be followed by a company or an individual for applying for a computer equipment lease are as follows:

• Select the equipment(s) required, considering the need for current technologies.
• Gather the key information of the company or individual, which will be required at the time of application.
• Apply and choose a term and the best-suited buyout option for company or individual.

Leasing helps to obtain equipment which are otherwise unaffordable. For example, an organization might be trying to obtain highly specialized and expensive equipment required for some sophisticated job. It is possible that the assets or the expenditure plan may not allow the organization to come up with the purchase money or credit line. But with some effort, it can qualify for a lease payment. There is always a possibility that the lease value is higher if the equipment to be leased depreciates in value quickly, but this higher payment is counterbalanced by the fact that the company or individual is not tying up his credit. When the payment and lease period is over, one doesn't get stuck up with an outdated technology and can always go for something which is more advanced and useful. Leasing of equipment is a better option than borrowing, as it gives an advantage of a lower payment, interest rate and a faster approval speed as compared to latter.

By leasing equipment, there is also an advantage of tax savings for the organization as the monthly payments are typically considered as operating expenses. Leasing thus adds a tax incentive as provided by the Section 179 deductions, keeping equipment up-to-date with the market and official requirements.

These exemptions are very lucrative at times and motivate the organizations to lease the required equipment. Sales-leaseback is one of the very popular forms of equipment lease and helps the companies to raise cash for investments or for any day-to-day purposes. This allows the companies to lease back the equipment which it has already purchased, making the depreciated value of equipment fall on the leasing company instead of itself.

There is also an option of purchasing the equipment at a fair market value when the lease period is over. This serves a purpose for heavy machineries which don't get outdated over a long period of time and if necessary it can always be replaced by a newer leased equipment.

With a great deal of research, constantly going on in the field of computers, newer technologies and software become obsolete on a regular basis. Leasing them provides an opportunity for the company to save money as well as be relieved from the responsibility of ownership. Before one approaches a company for lease, consultation with a financial adviser and a thorough research on the different organizations which provide computer equipment on lease is necessary.