Casey Bralla on 13 Dec 2008 17:18:30 -0800

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Re: [PLUG] To buy or to lease

"Back in my day" I was pretty big on capital equipment purchases and 

The Buy vs Lease argument is almost always a "financing" decision.  It turns 
on the following points:

1.  Do you have the cash, or the ability to borrow the cash painlessly to make 
the purchase?
2.  Will you be dumping the equipment before it has exhausted its useful life?  
If so, will the leasor value it at fair market value for the depreciating 
asset, or at a discount?

There (usually) is no free lunch.  In a perfect world, the net costs are 
identical, but the cash flows are different.   Leasing works best when the 
leasor subsidizes the interest rate, or you lack the cash to purchase the 
asset outright (or lack the ability to borrow the cash from someone else).  
Of course, if the leasor is willing to subsidize the interest rate, you could 
probably demand an equivalent discount if you paid cash.

On Saturday 13 December 2008 7:20:26 pm Mag Gam wrote:
> At my company we are planning budgets for next year and due to the
> horrid economy I would was wondering if it was cheaper to lease
> equipment (servers) for 2 years, buy new or buy used? I am slowly
> leaning towards to lease side, since we almost always get extra
> "services" such as parts and labor.  Any thoughts?

Casey Bralla
Chief Nerd in Residence
The NerdWorld Organisation
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