To buy or to lease? That is the question.
When does it make dollars and cents to buy vs. lease or rent? Well my friend, it all depends on what you’re acquiring, how often you use it and what its re-sale value is.
What are you acquiring? Is it a car, a printer, a stove, a business card? This one boils down to cash fl ow. How big is the purchase and how will it affect your business operations? If it’s a larger purchase and you don’t have liquid cash available to you, renting or leasing is probably your best bet.
You should also consider whether or not you have the credit score or co-signers available to you to obtain what you’re seeking through a lease.
How often do you use it? After owning an audiovisual company, my question is how many times do we have to use a product to pay for it. On average, after 10 to 12 uses a product is paid for out of its rental cost. If you plan to use it more than 10 to 12 times, it often pays to purchase or lease to own rather than rent. That way after it’s paid for, you make pure profit.
What’s the re-sale value? What price can you get for the product if you were to sell it after you’re done with it? Knowing the audio-visual market, lights, projectors and audio gear tends to hold value. Cars on the other hand depreciate like there is no tomorrow. When I was 18, I bought my first car. Two years and $13,000 in maintenance later, I chose to lease my second one.
What perks come with it? When I leased my second vehicle everything was included: extra tires, free maintenance, $1,500 cash back and a car cleaning kit. What more could I ask for? The benefits of leasing often include a tax write-off or incentive, so it might literally pay to ask your tax professional.
And you could always keep your business online. Online affiliate relationships are often available where you won’t have to buy, rent or lease anything and just make a commission on whatever you sell.
Look at all your options. Personally I like to own things — especially things that don’t depreciate. This week’s homework: look at what you’re renting or leasing that you could buy and vice versa. Optimize your life.