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Why Companies Prefer Leasing Over Buying

Lease vs Buy. Which is better? Which is more cost-effective?

It can be a tough decision to make, especially when considering that different industries benefit more than others from leasing or buying outright depending on the specific needs of that sector. Therefore, you need to consider the pros and cons in relation to your own unique business. It’s possible to lease almost anything you could buy, such as cars, property, IT and telecommunication equipment, printers, photocopiers, machinery, and even furniture. So, deciding the best option for each of these needs some research and careful consideration.

Many businesses have embraced the advantages of leasing the equipment they need to run their company rather than purchasing it. A lease means paying monthly for the assets and then giving it back after the agreed term. You do not own the item during or at the end of the lease, which is an important aspect which puts some companies off. However, thousands of companies still think this is the right decision for their business. Here are some of the biggest reasons why companies prefer to lease:

  • You get more purchasing power.
  • There are 100% finance options.
  • You’re not responsible for maintenance and repairs.
  • You get your items quickly.

You get more purchasing power

If you decide to lease something for your business, it can give you more freedom on the type of items you can afford. Paying monthly means you can get higher-end equipment that you usually wouldn’t have the money for otherwise. This means you have more purchasing power - the type of items you will be getting from leasing is often better, more functional and more powerful than the items you could get from owning outright.

This could benefit your business a lot, depending on what you’re hoping to lease. If it is IT equipment or machinery needed to run your business, the availability and use of state-of-the-art equipment would benefit you immensely and increase your company’s performance and therefore revenue. This is the most common reason why a company would choose to lease something over being able to own it as an asset.

There are 100% finance options

For most leases, it’s possible to arrange a 100% finance option, with no big upfront initial payments to make, which means more money to help your business grow in the day-to-day. Many companies opt for this even if they can afford an upfront payment for the option of having the extra money to reinvest in other projects within their business.

You’re not responsible for maintenance and repairs

Lease agreements are tailored to your needs, which means they can include maintenance of the items if they break. For computers or machinery, this maintenance is exceedingly beneficial as it means if a breakdown occurs, the warranter will come and fix or replace it immediately. This feature means you don’t need to worry about forking out every time something needs repairing. It also reduces the amount of downtime companies who lease key functional assets have compared to those that own all the assets pivotal to the running of their business.

One reason why people can be averse to leasing rather than paying outright is that you could pay more money for the item overall if you use it for an extended period and then you don’t even own it at the end. However, if the continued use of the asset benefits the business, then nothing is lost and as a bonus, you still have no disposal concerns. In fact, most people who lease consider it a financially more affordable option.

You Get Your Items Quickly

With leasing, depending on what the asset is, it’s usually done and dusted in a matter of days. The equipment vendor, knowing the lessor will pay for the items, will deliver whatever it is quickly (depending on availability). This turnaround on leased items is usually quicker because there is no waiting for relevant credit checks to be done and money to clear, especially on big purchases, there are so many cogs going on and other parties involved when buying, so it usually works out quicker to lease.

Still don’t know which one is for you and your business

Being sure about the decisions you’re making for your business can be tricky. You’ll want to make sure you’ve considered all the angles and know the details of each option.

At Quadrent, we have a long history of making the complex world of leasing simpler. We work with organisations helping them access assets without sacrificing cash flow and addressing their ESG risk in the process. With a team that has in-depth leasing knowledge and specialised accounting backgrounds, we’ll help you get the most value out of your assets while addressing growing ESG requirements and reporting expectations.

Understanding Leasing vs. Buying Your Equipment