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Purchase or Lease? The Pros and Cons

Which option is right for your business?

Purchase or leasePurchase or lease?

You need to consider many things when you want or need new multifunction printers for your business. Deciding to purchase or lease is one of those decisions.

First, you’ll need to decide on a brand, functionality, color or black and white, and numerous other options. You’ll want to consult a company that understands your business needs based on a consultation on your workflow, the number of employees, and how much you print.

Once you and your sales representative have settled on the right equipment, the big decision is how you want to pay for the machine.

Your sales representative will offer you several options, but most clients usually choose to purchase the machine outright or lease it.

If you want to own the machine outright and have the funds to afford that decision, then purchase is your choice.

However, if you would rather lease the machine, your sales rep will show the options on what leasing will entail and advise you on a service and supplies agreement to go with that lease. The reason is that while the machine is on lease to you, you are responsible for the upkeep and maintenance of the equipment. That agreement is like an insurance policy for your new machine.

One of the most significant benefits of leasing is a budgetable monthly payment for both your lease and your service and supplies agreement. For example, your monthly lease payment might be $139.00 a month for 60 months, and your service and supplies agreement might be $45.00 a month (includes all service and supplies). This is a budgetable expense.

The next step is choosing which leasing option is best for you.

The most chosen lease types are FMV (Fair Market Value) and $1.00 Buyout.

With a qualified FMV lease, your payments will be lower, and at the end of the lease, you have the option to purchase the machine at the “Fair Market Value.” The leasing company will determine that value based on the machine’s condition and age at the end of the lease.

Your monthly payments can range on average from 12 to 63 months. Most companies choose the number of months based on the monthly payment amount they are comfortable with and can manage within their budgets.

With an FMV lease, you also have the option to upgrade your equipment and “trade up” your old machine for newer technology. Your sales rep will facilitate this upgrade through the leasing company on your behalf and arrange the removal and return of your old equipment and the installation of the new one.

You also have the option to return the machine. In this instance, you will contact the lease company and provide them with a letter of intent to close the lease and return the equipment. Most companies choose this option if they are closing the business or no longer require the machine.

With a qualified $1.00 Buyout lease, you are given the option to purchase the machine for $1.00 at the conclusion of the lease. At the end of the lease, you would contact the lease company to facilitate the purchase of the machine and pay any existing taxes or fees associated with that purchase. As with the FMV lease, your monthly payments can range from 12 to 63 months.

What and how much equipment can I lease?

You may lease as many machines as you need, as long as the total amount meets the approval of the leasing company. According to the leasing company’s policies, you may choose three large multifunction copiers and twenty printers as long as you qualify. You may also lease various machines simultaneously and include them all into one lease.

Purchase or leaseWhat if I decide I need additional equipment after my initial lease has been finalized?

If you have an existing lease, and perhaps your business expands, or you realize you didn’t acquire enough equipment, you have the option to add a coterminous lease to your existing one. The new coterminous lease will run concurrent with the existing one, and they will both end at the same time to avoid overlapping or creating a whole new lease. You, of course, also have the option of applying for a separate additional lease.

What if I am a new company with little or no credit?

Lease approvals are never guaranteed, and the outcome varies from one leasing company to another. However, some lease companies will give the business owner the option of providing a personal guarantee. The equipment can reside at the owner’s business, but the person who signs the personal guarantee is ultimately responsible for the lease agreement. This responsible party must provide and use their own credit status to secure the lease.

Property Insurance

When you acquire new office equipment, you are required to add the equipment to your property insurance according to leasing company policies. Remember, technically, the leasing company owns the equipment until the lease is satisfied, and they require you to protect that investment with insurance.

Points to Remember

  • If you choose to purchase your equipment, you own it. It belongs to you until you no longer need or want it. When the time comes to upgrade the machine, it will be your responsibility to dispose of it responsibly. You have the option to sell it yourself, or if it is no longer functioning, you should contact a company that recycles old copiers responsibly. Keep in mind that copier and printer technology is more advanced than ever, and most contain hard drives. You’ll want to choose a recycling company that will wipe or destroy that hard drive. Most companies charge an additional fee for this service.
  • If you choose to lease your equipment, your copier and printer dealer can facilitate the return of your equipment if you no longer want it. They can also provide you with options to upgrade your old equipment and manage the process of returning the old machines and installing the new ones.

We hope this helps answer most of your questions about making the best choice for your company to acquire new office machines. As always, if you have any questions, please get in touch with us, and we’ll be happy to assist you.