Your business needs a long list of IT equipment like computers, servers, printers, copiers, networking equipment, fax machines, and other technology that is unique to your specific needs and so on.
You may be inclined to lease IT equipment given that they get outdated quickly, and you would rather have a leasing company deal with the obsolescence while you focus on upgrading to newer and faster technology periodically to keep your business efficiency and productivity on high gear.
Now you are left with a big question – how much does IT equipment leasing cost? Let’s find out.
IT Equipment Financing Overview
The core concept behind financing an IT technology company is the same as any other. You get additional funding so that you can accomplish more in less time, make larger purchases, higher more people, and so on.
When it comes to IT leasing, not everyone has the ability to understand exactly what it is your company does. Explaining why you need IT equipment leasing can be confusing to someone who isn’t experienced with your technology. Someone who doesn’t take the time to understand, even at a surface level, what your technology does, is not likely to appreciate just how beneficial it can be.
The same goes with working with IT equipment leasing companies. For a good match, they need to understand what you do and how your business operates.
Avoid Outdated Technology Equipment
Depending on the type of business you own, equipment leasing may help your business stay on top of the latest advances in equipment and technology. Being able to make upgrades to newer equipment when the short-term lease is up can give your company a competitive edge.
When buying equipment, a business is stuck with it unless they can sell it. So, if the business uses equipment that is periodically updated with better technology and capabilities, leasing might be the best option.
As a rule of thumb, it is generally a good practice to lease IT equipment for shorter periods of 24 to 36 months. This gives you the flexibility to upgrade when newer technology becomes available.
Keeping up with the latest IT equipment is probably the #1 advantage of IT equipment leasing.
As I mentioned earlier, you can focus on embracing newer technology that would be faster, efficient, and cheaper all of which would help your business’ bottom line while you let the leasing company worry about obsolescence.
When you keep up with technology, you are also keeping up with your competitors. This is another added benefit for keeping up with technology.
Fixed Monthly IT Equipment Leasing Costs
When you lease IT equipment, you have fixed monthly or quarterly payments. In most cases, you don’t need to worry about any upfront down payments.
From a cash flow perspective, it is a fixed line item, and there would be no variability or surprise. This is another great advantage.
How much IT Equipment Can I Afford To Lease?
Click here for an Equipment Lease Calculator that will help you figure out how much IT equipment you can afford to lease. Figure out how much to spend based on what you can afford monthly
Downside of IT Equipment Leasing
There are always two sides to every story. Now what could be the downside of IT equipment leasing? I will start with the obvious that you would end up paying slightly more over the term of the lease for your equipment that if you were to purchase it.
However, the trade-off is between keeping up with technology which is so much easier with leasing vs. hanging on to outdated equipment that comes with purchasing.
Keep in mind that you may end up spending more money with a purchase if you were to sell the equipment in 24 months and then upgrade to new IT equipment.
If your IT equipment is something that doesn’t need upgrades every 24 to 36 months, then you could consider purchasing it if you have the capital to make an outright purchase.
This is an area where you should evaluate your frequency at which IT equipment upgrades are needed to determine a buy vs. lease decision.
Your Business Finances Impact IT Equipment Finance Rates
As we always say, there’s no one-size-fits-all when it comes to financing any company. Even if two businesses have been in business the same amount of time and have the same credit score, chances are the rates will still be different.
So what impacts the cost of your payments when leasing IT equipment? There are common factors that play into the total cost of your IT equipment financing:
- Time in business.
- Credit score (personal & business).
- Amount of funding needed.
- Duration of lease.
Obviously, the longer you’ve been in business and the better your credit score, the better your rates will be. If you’re just starting out or you don’t have near-perfect credit score, don’t worry. There’s still financing options available for your business.
What's my IT Equipment Lease Interest Rate?
Use this equipment lease interest rate calculator to calculate what your annual percentage rate is on your equipment leasing agreement. This equipment leasing calculator computes the lease rate based on a known payment amount, lease amount, residual amount, and lease term. Click here to get access.
Estimated IT Equipment Leasing Cost
Any business that promises that you’ll get a certain financing rate before they know your business financials is probably just trying to swindle you out of your money. Always take the time to talk with financiers. If a financier is taking the time to get to know and understand your business, that is probably a good sign.
We can provide estimates, but understand that your own business financials and situation will impact the actual financing rate that technology leasing companies will offer. For the sake of an estimate, let’s assume you need $100K in funding for your technology equipment over five years.
New Business + Good Credit
You have good personal credit, but you’re just starting out. There’s inherent risk of investing in a new business. Your monthly amount can vary on average between $2.3K and $3.3K.
New Business + OK Credit
You might not have great credit, and you’re just starting out. Since financiers are assessing the risk of their investment, you may be asked to make larger payments of $2.5K to $3.5K in addition to, in some cases, a larger down payment or collateral.
Established Business + Good Credit
One of the best scenarios to be in is having years of experience on top of sustaining great credit. Your monthly payments will be the lowest here at only $2K to $2.2K per month.
Established Business + OK Credit
Even if you don’t have the best credit, being in business for years gives you an edge over a startup because a financier knows you are business minded enough to maintain consistent sales. You’re likely to look at a monthly payment between $2.2K and $2.9K.
What will my IT equipment lease payment be?
Using an equipment lease calculator you can quickly come up with a monthly payment for budgeting purposes.
Click here for a resourceful IT equipment lease calculator tool to see what your IT equipment lease payments could be.
The tool will also give you an amortization schedule so you can give it to your accountant during business tax season to help him decide the best way for you to get the best tax write offs now and in the future to lower your taxable income.
Final thoughts on How much does IT equipment leasing cost?
Be sure to find an equipment lessor or broker that specializes in IT equipment because they have the asset management team to resale the equipment in case of a default so there internal cost of funds will be lower than equipment lenders that don't specialize in information technology equipment. IT equipment lenders have the capacity to refurbish and resale the equipment to recover losses or gain revenues after the term of the lease.
IT equipment leasing has an easier and faster application approval process than traditional bank loans.
At Trust Capital USA, the approval of an IT equipment leasing application only takes approximately 2-4 hours. The company offers an easy application process that can be found on their website. You won’t need to wait for a long time before your application gets approved. Trust Capital will also do business software financing.
Would you like an IT Equipment Lease quote? Click the link below! or Call 866-458-4777