Leasing Vs Buying Office Furniture

By Author: Mel Joelle
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Deciding whether to lease or buy office furniture is not unlike deciding whether or not to lease or buy a car. There is a wide range of pros and cons to carefully consider before making up your mind.

One of the most important things to do first is to sit back and assess your business. Are you an established operation with a steady income? Or are you just starting out and don't have a lot of capital? For newer companies, leasing often makes the most sense. With leased equipment, you put out less money (money that you might not have) to get the equipment you need. You can concentrate on spending your money on more important things while still being able to work efficiently. If your profits are higher because your company has made more of a name for itself and has been around awhile, you may want to purchase your furniture. There are certainly other questions to be answered before you make that decision.

Another important factor to consider is how long you plan on keeping the equipment. If it's something you plan on having for a short period of time before upgrading or switching to something else, whether this is ...
... caused by changes in the size of your company, the needs of your employees, changes in technology or any other factor, it may be smarter to lease than to resell it when it no longer suits your needs. With a lease, you can often choose to buy it out at the end if that works for you.

According to the Equipment Leasing Association of America, leasing of telecommunications and computer equipment has grown the most in recent years. This makes sense as technology is a rapidly changing field and many businesses rely heavily on it. If the most up-to-date technology is crucial to your business, it would be beneficial to you to take out short leases on your office equipment. This way, as technology advances you can be using the newest equipment. Plus, it makes no sense to shell out large sums of money for equipment that may not meet your specific needs in a year or so. If technology is less important to your company, purchasing equipment that you can use for years at a time may be smarter.

There are definitely some disadvantages to leasing. First, you never know where your furniture or equipment has come from. You have to rely completely on whatever the company you're leasing from tells you. For this reason, it's important to use a company with a good reputation when you lease. Also, be sure to know all of the terms of your contract, including guarantees and warranties.

Another downside to leasing is that, in the end, leasing is generally more expensive than purchasing. While you put out less money initially, the sum of your payments almost always exceeds what you would have paid if you purchased the product outright. You also have to pay for the equipment for the entire term of the lease, even if you are no longer able to use it—unless you pay a termination fee.

If you do decide to lease, there are typically two types of leases to choose from. Operating leases are generally for five years or less. This type of lease is popular for businesses that don't intend on buying the equipment when the lease expires (often times it is technological equipment). Finance leases are leases that companies use when they want that option to buy at the end. Typically longer, this type of lease allows companies to make smaller monthly payments.

Deciding whether to lease or to buy may be a more difficult decision than you originally anticipated. Every business has different needs. While it may seem obvious that one company should purchase their equipment, another company may have a lot of trouble deciding which is more beneficial. It is so important to weigh all of the factors before making your final decision. At MAiSPACE, we offer you both options and help you decide which one is best for your company. Call us for a free consultation.
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