Should I Consider Leasing Technology Assets?

Technology infrastructure is an important investment in your business, one that many assume requires capital (cash!) upfront. But this is not the case, as most of Cabco’s product offerings are able to be financed via a leasing arrangement through a third-party financial partner. In this article, we will discuss about the pros and cons of leasing equipment for your business.

What are the Advantages of Leasing?

The first major advantage of leasing is the ability to free up cash flow. Instead of a large lump sum payment, your business can pay for the asset over an extended time period (2-6 years is most common) on a monthly basis. This provides a better match to the revenues that your business will generate to facilitate the payback of the lease. Your payments are fixed over the term, removing the uncertainty that you face when using an operating facility through your bank.

Another serious advantage is that soft costs, such as installation labour costs, can also be included in the monthly payments. Finally, you own the equipment outright at the end of the lease, with most deals structured with a final $10 buy-out. And with most of our products having expected useful lives much longer than the lease term, it provides an attractive ROI.

What are the disadvantages of leasing?

The cons list is relatively short. This includes the fact that the lease rate may be higher than a bank financing rate (depending on your business), you clearly incur more interest cost versus buying outright, you don’t own the equipment until the lease is completed, and you are responsible for all payments under the lease arrangement.

What we Recommend

In our opinion, the pros vastly outweigh the cons and often make for an attractive solution. We have seen an uptick in this form of financing and for good reason. It is straight-forward, cash flow attractive, and professionally administered. A client will often have an approval within one hour of Cabco submitting the application. To learn more about leasing our products, please email us at sales@cabco.ca or call us at 1-800-675-4025.