Copy Machine Lease or Purchase?

Over the years, I've had many customers ask the age old question. Should I lease or purchase this copier?

I've been in the business almost 30 years and for those 30 years at the end of 36, 48 or 60 month lease you have been able to lease a new machine with more features and the same speed for less than what you leased the system for.

Yes, interest is charged on the lease.

However there are many things to consider when leasing. One, you preserve you capital, meaning you do not have to lay out $10,000 for a new system. Two, the "Time Value of Money". Three you can write off the entire amount of a "Fair Market Value" lease within the term. Four, basically the system are worthless after 48 & 60 months, new technology in the industry comes along every eighteen months or so.

Consider this scenario, today I spend $20,000 for a new copier system, in three years the system is shot, either due to not working well, or over use. Purchasing another system means spending another $20,000, so in three years you've laid out $40,000. If you would have leased the system for three years, you would no initial out lay of cash and could turn in the system and release another. Even if you lease leased for $20,000 for 60 months, payments would have been $390. Thus, after 36 months you would have 24 payments of $390 ($9,360) left. Here you can do a few things, negotiate with dealer to pick up a few payments to upgrade with them, or roll the balance into a new lease. Most dealers will pick up some of the remaining balance, lets say 20% ($1,872), your balance in the old lease is now $7,488, the cost of the new machine is again $20,000 ($390 for 60 months), and the balance on the old lease is $7,488 ($146.01), your new lease would be for $536.01. Your out of pocket for 36 months would have been ($14,040 initial term & one new payment at $536.01) $14,576.01.

Talk to your account, see what they think is right for you.

The only way I would purchase a system is at the end of the the year and I need the right off, or I am a very low volume user and believe the system will last ten years.

Hope this helps!!!