Buying

Leasing

Owning equipment requires the buyer to be responsible for the entire life of the equipment.

Leasing equipment requires the user to be responsible for the equipment for just as long as he or she is using it and in possession of the asset.

Equipment owners are responsible for tracking the asset through its entire life cycle.

Lessors frequently offer asset management services as part of the lease, transferring the responsibility for tracking the equipment to the leasing company.

In many leases, the burden of maintenance, interest, taxes and insurance is managed by the lessor.

The owner bears all the risk of equipment devaluation. Obsolescence must be tracked by the owner.

The end user transfers all risk of obsolescence to the lessor since there is no obligation to own equipment at the end of the lease.

Owners must manage the disposal or selling of outdated equipment. This can slow down the upgrade process.

Leasing allows for easier upgrades, including master leases that allow for additional equipment to be acquired under original terms and automatic upgrades to new equipment and technology.

Owners must manage asset liability on their books. Financial accounting standards require owned equipment to appear as an asset with a corresponding liability on the balance sheet.

Leased assets are expensed when the lease is an operating lease. Such assets do not appear on the balance sheet, which can improve financial ratios.

Buying equipment has a greater, immediate impact on cash flow, either through an outright purchase or through loan payments historically higher than lease payments.

Leasing usually has a lower impact on cash flow due to lower payments.