Purchasing outright leased equipment

[dgsmith]

A few years ago, we opted to lease our server/san hardware rather than purchase outright due to financial restraints. At the time, we understood (and it was contractually written) that there would be an end-lease purchase option via a "third party". What we need to understand is the implications of this, as I believe that schools buying equipment and subsequently owning after a lease contract is not seen as a legitimate option (despite it being given at the start as an option).

 

What have other schools done in a similar situation and could we fall foul of anything if we look to follow through with the purchase option via 3rd party as set out in the contract?

[Brimstone]

Any figure quoted to buy the equipment at the start of education lease contract is illegal.....

 

I would thoroughly check all the documentation for you get title before you pay anything, school can claim title of the equipment at the end of an operating lease but this figure can only be quoted at the end. Double check what the residual value with other vendors as some items, such as iPads have a very high residual value.

[Cache]

You can't purchase the equipment out of the lease, as that would then be classed as a finance agreement/loan which schools can't enter into without approval from the secretary of state.

 

What you need to do is look at the paper work or contact the leasing company and see what your options are at the end of the lease. Normally you can get a nominated 3rd party to buy title to the equipment, continue renting the equipment under the same terms of the lease, send the equipment back or pay to have continued indefinite use of the equipment.

[dgsmith]

As it's the server cluster and san, it's not viable for us to not own at the end (esp as only 3yrs old). The option to buy via a 3rd party was noted when we entered the lease agreement, but this option hasn't been included on the end of lease options (which we have queried).

We understand the implications surrounding finance leasing and not being able to buy it from the lease company, though the fact they offered purchase via a 3rd party suggests the end result desired is feasible.

 

The main query and confusion surrounds the 3rd party buyout option (i.e. is this legit, can this be done, who can act as a 3rd party, would there be any ramifications).

[Cache]

When we were looking at it, the 3rd party can be anyone including a body such as a PTFA if you have one. You just need to bear in mind that (from my understanding) it can't become your property no matter what you do, you just enjoy the benefit of it's use.

 

We opted for Continue Indefinite Use as this was the prefered option of our accountants/auditors.