Leasing vs Purchase outright

[agibson]

Dear all

 

To cut a long story short we need to replace a lot of hardware (desktops, boards, monitors, projectors etc etc) soon and don't really have the financial resources to do so all at once.

 

Could you please tell me what you do with regard to hardware replenishment? Do you go for a lease scheme or buy it outright?

 

Previously we have bought outright with a minimum 5yr warranty (which probably added around £30 onto the price), but have been asked to investigate what other academies and schools are doing. My gut instinct is to still continue buying but with long warranties (and higher specs) as in my mind it would work out cheaper over the life of the machine.

 

We won't have the money to do this for a year or so, but we need to start investigating the options.

 

Thank you in advance

 

Andy

[Chris_Cook]

Buying refurbished kit is a great option. That's what we've been doing over the last year.

[FN-GM]

We buy everything with good warranties for all our academies apart from MFP's / Copiers. We lease this, due to all the moving parts, repairs etc. It just isn't worth it.

[MatthewL]

Personally buy with the relevant warranties. The only equipment I would lease would be MFP as they can be expensive when they go wrong.

[m25man]

Leasing is for businesses whom wish to defer capital outlay but can take advantage of the tax benefits it can provide.

 

Personally I cant see the sense of schools borrowing money then repaying inflated APR's to the banking sector whom we the tax payer have already bailed out once from the public purse!

Its MAD!

The poor old tax payer ends up paying twice for something that will be obsolete before the lease runs out!

 

BUT, if the school has no spare cash what else can they do!

 

I think the saying goes, "If it deprecates Lease it, If it appreciates Buy it" but obviously that only works if you name is Trump.

[snagrat]

I don't see the problem with leasing.

If you use a good leasing company normally it will work out cheaper than buying outright but you don't own the kit. You give it back after X years

 

If you had a 5 year lease and all equipment had a 5 year warranty then you could just pay X amount per year knowing in 5 years time you will all new kit again. Who wants to keep anything over 5 years anyway!

[cmpwat]

Leasing for schools doesn't have interest attached to it as the DoE has stated that operating leases cannot have interest.

[m25man]

Leasing for schools doesn't have interest attached to it as the DoE has stated that operating leases cannot have interest.

 

Agreed, but you can disguise the terminology any way you like, there are fees to be paid for spreading the capex cost over an agreed period to provide the "services" which then goes towards compensating the financiers in the form of a return on their investment.

That's life, no avoiding it. It's not free money.

 

Find the best cash deal, buy it if you can afford to.

If you can't at least you have some comparative numbers to take into your Lease negotiations.

[Chrisbf1]

Leasing is the way forward for schools who do not have a capital pot to draw on. It allows the school to buy the latest kit and refresh over 3 years thus ensuring it does not get outdated. In an ideal world we would have a good replacement plan, you do x number of pc/laptops and projectors and you have a good rolling program. But the way education funding has changed some schools have been caught out. i know in Primary schools there used to be a myriad of refresh, pfi , initiatives. These have no all but disappeared. The schools now need to budget a lot more carefully as despite government assurances education funding is reducing. In Agibsons case he really has no choice but to go down the operating lease route. The equipment is needed in the classrooms to ensure Teaching and Learning is there.

Like other posters have said, it is governed by DfE guidelines so there is less chance schools are going to get fleeced (it does still happen!!) To take a positive if you pick the right route you can get new kit every few years. Also the schools knows that they must budget for that set amount every year. (otherwise the lease company will be banging on the door!) This means that when budgets are tight the business manager cannot cut ICT budget

[localzuk]

Leasing is a pain from an accounting point of view, I know that much. Also, somehow schools still manage to get caught out with it - one of our schools appears to have paid a goot £6000 over the odds for their curriculum suite PCs for example.

[pcstru]

I look to leasing for big ticket items which are prone to be extensive to maintain : so I'd think we are unlikely to ever purchase MFD's and copiers outright. Otherwise I find leasing takes away flexibility especially in an environment where budgets are highly variable from year to year. So sure, I don't want to operate machines over 5 years old, but over the last few years doing that has been critical (and 5 year old processors are generally fine for most current workloads). It's also been highly beneficial to be able to upgrade machines (RAM and SSD's) to extend the life of stock - again the flexibility of ownership has been a boon in the circumstances we have found ourselves in. IMO if leasing is being driven by financial constraints (lack of money) then leasing is actually a poor way to manage the financial risk (you are effectively gambling that you will have that money in future).