You’re considering upgrading your office technology or maybe you’ve already decided you need to purchase a new copier or printer. What are your options for a copier purchase? Should you buy or lease your new office copier?
Every organization has a preferred method for purchasing based on their budget and future intentions. Before you invest in your new technology, it’s important to know the options available to you when making this investment.
To help you determine how to buy your device, here are the methods for purchasing new equipment:
The first option is to purchase your new copier or printer outright. With this option you pay for the device up front and own your equipment immediately. You can decide if you want to purchase a separate equipment maintenance agreement with our organization.
Purchasing outright means that you won’t incur any additional costs associated with financing, however, this can be quite a large investment to pay for upfront. Additionally, you have just purchased technology that depreciates and will get outdated as advancements are made to technology.
Lease vs. Bundled Lease
If you don’t want the financial burden up front, you can finance your new equipment. You can choose to lease only the equipment or bundle your equipment and service contract into the same lease.
When you lease equipment, you are given the option to add on a separate maintenance agreement. This means you will have two separate invoices for payment. In contrast, with a bundled lease your maintenance agreement and equipment are all on the same invoice – one payment per term.
When leasing, whether bundled lease or not, there are two types of financing to choose from:
Fair Market Value
A Fair Market Value (FMV) lease, also known as an operating lease, requires a smaller monthly investment. With this option you will use the equipment for a pre-arranged time period and determine which payment term is most suited to your organization. The payment term can be anywhere from 12 to 63 months, and be billed monthly, quarterly or annually. This is the best option for businesses that want to stay up to date on the latest technology when their lease is up.
While financing gives you the flexibility to get your payment to an amount that you’re comfortable with, something to consider is property taxes. With this lease type, the bank or lender owns the title to the equipment throughout the term. Banks and creditors are not tax exempt, so any property taxes will be billed to the account on an annual, quarterly or monthly basis.
At the end of the term, you can choose to upgrade your equipment or purchase the device at its then-determined Fair Market Value.
A $1 Buyout is a lease with a $1.00 out purchase option at the end of the term. This is a good option for non-profit organizations with tax-exempt status. With this option your organization is the owner at the time of delivery. If you are tax exempt, your equipment may not have the additional expense of property taxes depending on your tax jurisdiction. Additionally, you will have the ability to keep the device at the end of the term without a large buyout.
A disadvantage of this option is the monthly payment will be higher. Therefore, this option is not recommended for companies that are not tax-exempt.
The monthly payment on a $1 Buyout lease is around 15% higher each month than a Fair Market Value lease. If you are not a non-profit organization, this option would mean that you are paying 15% more each month for the ability to buy the equipment at the end of the end of the lease. For this reason, Fair Market Value leases make up the majority of