Rent, Lease, or Buy a Business Notebook Computer
Laptop Rental, Laptop Lease, Laptop Purchase – Which is Best?
Aug 25, 2009
Despite the drop in price in laptop computers for home and school, powerful business notebooks still carry a hefty price tag, especially for the Small Office/Home Office (SOHO) market but even for larger businesses with need for a high number of units.
There are four possible methods for obtaining computer equipment
- Rent
- Lease
- Finance
- Outright Purchase
Laptop Rental
For a short-term, temporary need – a month or two at most – notebook rental (called notebook hire in some countries) is the best choice. Rental specialists rentacomputer dot com has been in business for twenty years and serves 1000 cities in the UK, North America, and Australia according to their web site. In his 2004 article "Why Rent a Computer? Renting vs Leasing" author John Beagle identifies numerous situations where rental will be the best choice. Among them are:
- Travel – A business person need not lug a laptop. A USB key or an external hard drive can carry the data to a rented computer at the destination.
- Image – A snazzy laptop can improve the impression on a client (who needn't know it's rented).
- Temporary Offices – Anything set up for a task force or pro tem situation can use rented computers.
- Special Projects – Laptop rental for short-term project needs is an economical solution.
- Temporary Employees – Why kept the notebook when the employee leaves?
Notebook Lease
Leasing provides a mid-term benefit for periods between one and three years. Gary Barzel, in a smartbiz.com article "The Pros and Cons of Leasing Your Hardware and Office Equipment", suggests that "Equipment leasing is perfect for a rapidly expanding small business or for a business that will soon be sold."
Advantages of leasing include:
- Current Technology – Peter Alexander, in "Should you Lease or Buy Your Tech Equipment" on Entrepreneur dot com notes that the ability to always have up-to-date equipment is the major benefit of computer leasing.
- Tax Benefits – According to Barzel, lease payments are classed as a business expense and can be claimed for a tax deduction. Payments on equipment financing loans cannot.
- Improved Net Worth – In many jurisdictions, lease payments are an expense while payments on loans taken for equipment purchase are classed as a debt. This boosts the net worth of the business, Barzel says.
- Budgeting – In "Leasing Computers: Pros Today, Cons Tomorrow" posted 15 May 2008 on her techsoup blog, librarian Sarah Washburn points out that, "With leased equipment, you don't have to work so hard to balance your annual budgets. Instead, the costs are spread evenly over the term of the lease."
- Flexibility – The wide variety in laptop lease periods and disposal options allows a business to tailor the program to specific needs.
- Preserve Working Capital – Equipment leasing preserves capital, says Barzel, for operating expenses or expansion opportunities.
Financing Laptops
Most vendors will offer financing for computer equipment, as will the bank. A business loan for equipment purchase will appear on the books as a debt, reducing the net worth of the company. However, financing has its attractions.
- Low Cash Outlay – The down payment will be a fraction of the total outlay, preserving capital for operations and growth as with a lease.
- Ownership of the equipment - If the equipment has a durable service life long after the loan is paid off, this is a strong benefit. However, rapid changes in laptop technology wipe out this benefit.
- Purchase Discount – It may be possible to negotiate a significant discount on a bulk purchase. This has to be balanced against the cost of borrowing.
- Payments Spread Out – As with a lease, a financed purchase has the payments distributed regularly over time
Laptop Purchase
With all the advantages of leasing or renting a computer, when does it make good business sense to buy rather than to finance, lease or rent computers?
A larger company with long-term goals, deep pockets, and in-house expertise may find purchase attractive.
- Buying power to obtain significant discounts makes frequent replacement less of an issue.
- The ability to depreciate equipment offers tax advantages not available with leasing or rental
- Cost savings (rental and leasing is more expensive in the long term) may balance out the initial purchase price.
- Laptops nearing the end of their service life may be sold to employees for a modest price, used as incentive or give-away prizes, or donated to charity.
Rental, lease, and purchase of notebook computers each offer advantages, with the benefits of rental having greatest appeal to businesses with short-term needs, leasing being attractive to the SOHO market, and purchase working effectively for larger businesses.
Of course, the savvy business will take advantage of all three as the situation demands.
Advantages of Computer Leasing
 |
 |
