Should I Lease or Buy My Printers and Copiers?

The next time your business needs printers or copiers you will no doubt have to make a decision that many companies struggle with. Should I lease or buy my printers and copiers?

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If you do not know the answer you are not alone.  The question gets asked frequently by our customers and the answer is not the same for everyone.  Before you make that decision lets look at some facts that our Good Fit Analysts have learned over the years.

About 80% of our customers lease their copiers.  Just 20 years ago the ratio was more like 50/50.

So why the significant increase in the number of leases?  The main reason is that technology changes so fast with all-in-one printers that it may pay to lease rather than buy.

After all, a copier is not a copier anymore.  Back in the 80’s and even the 90’s copiers just copied.  Today they copy, print, scan and fax and are an integral part of the document management of an office.  With so many businesses attempting to go paperless, the multifunction printer is a powerful tool.

We know it can seem confusing but to help you figure out which option is best for you let us look at the pros and cons of both leasing and buying technology equipment.  Also, lets look at the questions you should ask to ensure you make the best decision.

The Benefits of Leasing your Copier

No upfront Costs.  One of the main reasons to consider leasing is upfront cost, or rather lack thereof.  Instead of having to put down a large lump sum, you can spread out payments over several years.  If managing cash flow is a concern for your business, this may be the best solution to get new equipment without having to make major changes in the budget.

Lower Payments: The lower payments of leasing may open more options for higher end equipment that is simply unaffordable when paying the entire cost upfront.  If you want the newest technology working for you then leasing could be the best way to achieve that within a budget.

Additional benefits of leasing:

  • Upgrading incurs little or no out of pocket expense.
  • The option to buy your device at the end of your lease, often at reasonable market value.
  • A longer payment period may mean you can upgrade to more advanced technology.
  • Qualifies as a business expense rather than a  capital expense / depreciating asset.

Tax benefits

Leasing equipment instead of buying has distinct tax advantages.  When leasing, the payments are considered to be a pre-tax business expense which means each time you make a payment, you can deduct the entire payment.  When you purchase the copier, you can only deduct the machines depreciation value.  Usually, that would be 40% of the purchase price in the first year, followed by 25% in the remaining years but you should confirm this value for your tax region.

The Challenges of Leasing your Copier

You will pay more in the long run.  Ultimately leasing is more expensive than purchasing.

You still have to pay even if you stop using the equipment.  Depending on the lease terms, you may have to make payments the entire lease period, event if you no longer need the equipment, which can happen if the business changes.

The Benefits of Buying your Copier

It is so easy.  Buying equipment is easy…you decide what you need, and then go buy it. 

The Challenges of Buying your Copier

The initial cost for needed equipment may be too much. Your business may have to tie up lines of credit or cough up a hefty sum to acquire the equipment it needs.  Those lines of credit and funds could be used elsewhere for marketing, advertising or other functions that can help grow your business.

Eventually you are stuck with outdated equipment. All copier technology becomes outdated in time.  A growing small business may need to refresh its technology in some areas every 36-48 months.  That means you may have outdated equipment.

Most importantly, make sure to ask lots of questions.

Is there a buyout option in the lease? You may have a choice between a fair-market value (FMV) option and a $10 buyout option.  FMV means you can buy the equipment at the end of the lease for its fair market value, which could be hundreds of dollars.  In contrast, a $10 buyout option means the equipment is yours for $10 when the lease expires.  And while that sounds like the best option, keep in mind that monthly payments on FMV leases are usually lower than $10 buyout leases.  If you are certain, you will want to upgrade to new technology when your lease expires go with the FMV option.

How long is the lease term? Usually leases for office equipment run 24, 36, 48 or 60 months.  The longer your lease, the lower your monthly payments.

Does the equipment have to be insured? Some leasing companies require you to insure the leased equipment which is as simple as notifying your insurance company.

Can I terminate the lease early?  Yes, leasing companies have options to buyout the lease or pay the remaining payments.

KOPYR specializes in helping businesses make the best decisions for their document environment and business needs.  Schedule a complimentary, no pressure consultation with a Good Fit Analyst and let us help you decide if you should lease or buy, as well as other ways to optimize and secure your business environment.