3 Red Flags to Watch Out for When Leasing Equipment

Monday, January 15, 2018

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When it comes to business equipment such as computers, servers and networking gear, should you buy or lease? It’s an age-old question with no universal answer: 

  • Leasing gives you predictable monthly expenses, minimal/no upfront costs and the flexibility to keep your technological assets up-to-date through frequent refreshes.
  • On the other hand, buying provides full control as well as additional tax deductibility.
  • Each route also has unique drawbacks, which vary significantly depending on the vendors and partners you work with. 

However, assessments of the pros and cons of leasing usually assume the worst-case scenario for contractual terms, conditions and fees. It’s true that not all IT leasing programs are created equal, which is why working with an experienced, trusted provider that listens is so important. Here are the red flags to look out for when evaluating your options:

1. Ongoing fees and surcharges

So-called evergreen clauses, which contain automatic renewal triggers for leases, have become so notorious that many states either already have or are planning to implement restrictions on them. For example, California and and Oregon require “clear and conspicuous” presentation of such clauses (i.e., not buried in the fine print) in consumer contracts, while other states including Kansas and Wyoming introduced similar legislation this year.

Evergreen clauses coupled with admin and doc fees, audit processes and unanticipated equipment conditions can lead to delayed sticker shock at how much your lease really costs. Find a partner like LaSalle Solutions that listens to your requirements, offers transparency from the get-go and doesn’t saddle you with these hidden expenses.

2. No technology refresh options

Leases for high-tech equipment assets can easily run for multiple years. That’s a long time in the tech world. For example, in just a 4-year span, Apple introduced and then removed the Touch ID fingerprint scanner from its top-of-the-line iPhone model. The rapid evolution of CPUs and Ethernet features, as well as the shortening lifecycles for related equipment, are also cases in point.

Over a three-to-five year period, only a fraction of the total cost of ownership of such technologies will come from the initial acquisition, with the rest stemming from maintenance and upgrades for increasingly obsolete gear. In this context, it’s important to have technology refresh options that enable you to keep up with new products and get optimal value for your dollar.

Cisco’s Gautam Munish pointed out that leasing — done the right way — can function as an efficient IT refresh program. A leasing solution such as LaSalle's EasyLease Equipment Leasing Programs help with the shorter lifecycles of hardware, software and networks by matching lease terms to the equipment expected useful life.

3. Poor visibility into leased assets

Ideally, leasing solutions will make it clear what you’re signing up for and help you keep track of key renewal dates as well as equipment conditions. This isn’t always the case in practice.

For example, say you lease some equipment that — due to your low overall visibility into your technological assets — turns out to be damaged. You prepare to file a notice for a repair or return, only to encounter onerous conditions related to the timing and formatting of the notice. You end up missing the end-of-lease date, triggering an unwanted automatic renewal or perhaps even a penalty.

LaSalle Solutions’ cloud-based LAMP platform provides deeply integrated 24/7 information management, giving you everything you need to view your leased equipment portfolio on any device. Learn more about LAMP and our leasing solutions today to ensure your get the best leases for your organization.

 

Learn how LaSalle Solutions does leasing right at www.elasalle.com/leasing

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