There was a time when IT equipment could be purchased and placed in the datacenter for five to seven years. Today, the lifecycle for many classes of technology can be as rapid as 24 months and for critical applications that figure can drop to 12 months. Many businesses must acquire the latest technology in order to maintain a strategic edge or to simply remain competitive. However, it can be a major challenge to pay for, maintain and manage these ever changing assets. Equipment leasing can be a strategic tool that makes sense when refreshing or purchasing new IT equipment. Unlike a bank loan, lease-financing is typically a faster process, requiring less upfront capital, while offering more flexibility.
Some of the flexibility includes the option to purchase or send the equipment back to the lease-financing firm. Watch out for unethical “balloon” payments or unreasonable penalties that may be more than the actual value of the equipment.
With equipment leasing, the assets are not purchased outright, but are “rented” from the lease-financing firm. There are numerous advantages to lease-financing including:
- Avoiding technological obsolescence
- Freeing up lines of credit
- Lower monthly payments
- Fixed rate financing
- Possible Tax benefits
- Less initial cash investment
- Fast turnaround time
- Conservation of capital
Although many IT equipment suppliers have their own captive IT financing divisions, which include equipment leasing, they do not always offer the best solution. Other lease-financing sources, such as Madison Capital, offer in many cases, more flexible terms that match the company’s needs.
Whether you need a dozen tablets, the newest networking gear or to upgrade servers and desktops, consider lease-financing as a viable option. Check out our IT Leasing video.