Most customers are unsure what the best financial option is for their business when it comes to their new office printer. Let’s take a closer look at the advantages and disadvantage of each.
Option 1: Buy
Advantages
- No interest repayments
- Depreciate the capital costs over a 5-year period
- You own the asset outright forever
Disadvantages
- Takes up a large amount of your capital upfront
- You are stuck with the machine for 5 years until the asset has depreciated
- As technology advances, your asset will decline in value
Option 2: Rent
Advantages
- No large upfront capital costs
- Monthly payments are 100% tax deductible
- May have flexibility to upgrade or add equipment during the agreed term
Disadvantages
- You don’t own anything at the end of the agreement
- If you want to upgrade the machine before the agreed term has expired, some third-party finance vendors will add the balance of remaining payments (payout) onto the new equipment rental agreement charges
- If you want to add equipment to the agreement during the term, some third-party finance vendors will restart the rental term, leaving you stuck with old equipment on a new contract
Option 3: Lease
Advantages
- No large upfront capital costs
- The interest charged on the lease payments are 100% tax deductible
- The lease value is depreciated off your books over a 5-year period
- You own the asset once the original residual or balloon amount is paid
Disadvantages
- The equipment is deemed an asset and is depreciated over a 5-year period
- If you need to replace the machine within the lease term, all outstanding repayments (payout) would need to be paid in full or added to the new equipment lease agreement
- By the time you own the equipment, the real asset value is minimal as technology has changed, plus more than likely the machine’s reliability has waned & the print vendor has annually increased your metered service agreement costs
