Leasing IT equipment - worth it or not
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@scottalanmiller said:
@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
What happened when it broke before the lease was expired?
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@Dashrender said:
@scottalanmiller said:
@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
What happened when it broke before the lease was expired?
Same as leasing a car - it gets fixed. That's part of the value of a lease, you don't have to worry about the equipment breaking as you are leasing a working product. You don't have to worry about support periods any longer.
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@Dashrender said:
What happened when it broke before the lease was expired?
We always got warranty the same length as the lease, you'd need to consult the leasing terms carefully
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@scottalanmiller said:
@Dashrender said:
In a similar situation, management would rather take a loan than a lease, in my case.
Sure, but that is purely a financial decision. You lose lease benefits that are often included like guaranteed support. Basically the company is attempting to structure their own lease. They would rather pay interest to a third party than to the vendor. An odd financial decision since there is zero pricing leverage then on either side. The bank has to make profit, the vendor has to make profit and you've added a third party to pay out to that was unnecessary.
I'm lost - Only on the mopier have I seen a leasing company provide any support for equipment that was a part of a least, then again I've never leased non new equipment for more than 3 years, which was the same term as the factory warranty on the equipment.
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@MattSpeller said:
@Dashrender said:
What happened when it broke before the lease was expired?
We always got warranty the same length as the lease, you'd need to consult the leasing terms carefully
Yes, your lease may or may not have a warranty built in. Where I was, the leasing and the warranty were the same. So there was one price, easy peasy.
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@scottalanmiller said:
@Dashrender said:
@scottalanmiller said:
@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
What happened when it broke before the lease was expired?
Same as leasing a car - it gets fixed. That's part of the value of a lease, you don't have to worry about the equipment breaking as you are leasing a working product. You don't have to worry about support periods any longer.
I've never heard of leasing a used car.
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@Dashrender said:
@scottalanmiller said:
@Dashrender said:
In a similar situation, management would rather take a loan than a lease, in my case.
Sure, but that is purely a financial decision. You lose lease benefits that are often included like guaranteed support. Basically the company is attempting to structure their own lease. They would rather pay interest to a third party than to the vendor. An odd financial decision since there is zero pricing leverage then on either side. The bank has to make profit, the vendor has to make profit and you've added a third party to pay out to that was unnecessary.
I'm lost - Only on the mopier have I seen a leasing company provide any support for equipment that was a part of a least, then again I've never leased non new equipment for more than 3 years, which was the same term as the factory warranty on the equipment.
That's just one kind of leasing. Leasing and buying are just ways to pay, how services are tied to those purchases vary dramatically. From a purely pay perspective, leasing is generally better.
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@Dashrender said:
I've never heard of leasing a used car.
Quite common. A lot of people lease a new car and trade in. Those traded in cars either go to auction or get re-leased.
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@JaredBusch said:
@Dashrender said:
I've never heard of leasing a used car.
Quite common. A lot of people lease a new car and trade in. Those traded in cars either go to auction or get re-leased.
which is it? common or not, your example specifically says "people leas a NEW car." Once it's traded it, it's off lease. I've never heard of used cars being available for lease. (I figured because the cost maintenance wouldn't be worth it for either the leasing company or the leasing company would have to pad the cost so much to ensure they were covered, it wouldn't be worth it to the end user).
The same goes for computers - Leasing a used computer seems counter-intuitive. The cost of maintaining 3-5 year old computers parts wise gets more and more expensive as the machine ages. So the Leasing company will need to build into the lease price the cost of ensuring that the equipment continues to function during the entirety of the lease, right? or do they just pawn that off on the end user?
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We actually have an off lease Vehicle got something with like 20,000 miles for not much money.
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@Minion-Queen said:
We actually have an off lease Vehicle got something with like 20,000 miles for not much money.
Sure, but it's outside the conversation unless when you acquired that used vehicle, you leased it, and didn't buy it.
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@Minion-Queen said:
We actually have an off lease Vehicle got something with like 20,000 miles for not much money.
That's off lease. We are talking on lease.
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@Dashrender said:
which is it? common or not, your example specifically says "people leas a NEW car." Once it's traded it, it's off lease. I've never heard of used cars being available for lease
It would be both on lease and off lease at the same time.
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@Dashrender said:
The same goes for computers - Leasing a used computer seems counter-intuitive. The cost of maintaining 3-5 year old computers parts wise gets more and more expensive as the machine ages. So the Leasing company will need to build into the lease price the cost of ensuring that the equipment continues to function during the entirety of the lease, right? or do they just pawn that off on the end user?
Actually it was brilliant. Best value for the customers. The cost of maintaining "old", and we are using the term very loosely here, is not that low because the leasing company was investing in well known, high quality, off lease machines and was able to maintain lots of spares at low cost. The price drop from companies irrationally dumping used machines because they were "old" meant that the prices were way below value. So the leasing was cheaper for the customer than they could possibly do on their own because buying used computers one at a time doesn't carry the same value and the customers lacked the wherewithall to know how to buy effective, used equipment.
It was financially super obvious if you actually looked at the numbers and how it worked. Anything but counter-intuitive. What it actually showed was how crazy it was to buy new and to overbuy so dramatically like most companies do.
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@Dashrender said:
(I figured because the cost maintenance wouldn't be worth it for either the leasing company or the leasing company would have to pad the cost so much to ensure they were covered, it wouldn't be worth it to the end user).
I think that you feel that the cost of maintenance of slightly used equipment, cars or computers, is much, much higher than it really is and this is throwing off your perception of value.
In a lot of 100 computers, you are unlikely to have to do anything more than replace one full unit (motherboard died) and maybe 15 - 20% of hard drives during a seven to ten year lease cycle. Maybe one stick of memory or something else odd. But very, very little. You build in the cost of the drives and you replace with bulk purchased, well planned out, low cost SSDs that last for effectively forever. Sure, there is some cost there, but very little. When planned accordingly that cost and risk is spread out over many, many machines and the lower cost of bulk buying combined with improved planning allows you to make the entire process predictable and affordable.
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@Dashrender said:
which is it? common or not, your example specifically says "people leas a NEW car." Once it's traded it, it's off lease. I've never heard of used cars being available for lease. (I figured because the cost maintenance wouldn't be worth it for either the leasing company or the leasing company would have to pad the cost so much to ensure they were covered, it wouldn't be worth it to the end user).
Common enough. Here is a consumer reports article on the subject.
http://www.consumerreports.org/cro/2012/12/used-car-leasing/index.htmI specifically stated that the new car gets traded back in and sometime goes out to auction/sale but other times goes back on lease. Thus used car on lease.
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I think that you will find that lots of used car dealers will offer leases if you ask. It is just another way for them to monetize.
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@scottalanmiller said:
I think that you will find that lots of used car dealers will offer leases if you ask. It is just another way for them to monetize.
I'm not in that market, so I definitely admit ignorance.
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I rarely lease because I have crazy complex driving patterns. Although now I am getting closer and closer to simply not owning cars at all.
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Just my $0.02 - if you're in a situation with more than 100 computers to lease, get new ones, roll them every 3 to 4 years.
