Business in Vancouver: News that works for you

    If you need to stay on the cutting edge of computer technology, you may find that it's less expensive to lease than it is to buy by Alan Zisman (c) 1996 First published in Business in Vancouver ,  Issue #336 April 2, 1996   High Tech Office  column

    How often does your business replace its computers and other high-tech equipment? Do you find it frustrating that just when you get used to using one level of technology, it becomes obsolete? A decade or more ago, Intel co-founder Gordon Moore suggested that computer power was doubling every 18 months and this trend--now known as Moore's Law--shows no sign of letting up.

    We may not really need to upgrade that often: many users continue to be highly productive on old equipment, especially if their needs haven't really changed. That old 286 or Mac Plus may be all you really need if all you're doing is word-processing with Word Perfect 5.1 or MS Word 3.0.

    But perhaps you need to be able to produce sleek page layouts or professional-looking presentations, or you want to connect to the Internet. You may be able to justify replacing your computer every two or three years, but taking that cash-flow hit can be a problem, especially if it's not just one computer you have to replace, but dozens or even hundreds at a time.

    If your company suspects it will be replacing its computers every couple of years, leasing may be a practical alternative to purchasing. This minimizes the cash-flow crunch, evening it out over the period of the lease, and the monthly payment, like rent and other business expenses, can be a tax writeoff.

    There are several local companies offering plans for computer leasing. Terms range from one year to longer periods, with two-year leases being common. For example, suppose your business wanted 15 Pentiums, each with a value of $2,500--a total outlay of $37,500. Depending on the plan, your cost for a two-year lease could range from about $1,725 to $1,850 per month, leaving you at the end of that period with the choice between buying your leased equipment for an agreed price or starting afresh with a new lease on more modern equipment.

    Leasing can minimize support and maintenance costs, especially if you no longer have to take care of a wide range of models of equipment purchased over a number of years. It ensures that all your hardware is reasonably current, and able to run the newest software. Your lessor should take responsibility for ensuring that the equipment continues to work over the lifetime of the lease.

    As with other business transactions, read the fine print: not all leases are equal. Make sure that service covers the life of the lease, not some shorter period. Watch the total cost--a little simple math should tell you whether the total of your monthly payments ends up being higher than the value of the equipment. (Make sure the value placed on the equipment is realistic.) If not, would you be better off taking out a bank loan and purchasing the equipment?

    Portable computers are often stolen: if you lease one, are you at risk of being stuck with carrying the cost of the lease for a computer you no longer have? Shop around, read carefully, and check with your accountant, tax consultant, or lawyer.

    For many, a final advantage of leasing is that you don't have to deal with getting rid of your old equipment. Many businesses have closets and storage space filled with stacks of older computers. If you lease, the equipment is simply returned at the end of the lease.

    (If you do have older, still-functional computers, you may want to contact the Computers for Schools project of the Science Council of B.C. at 438-2752 or Project volunteers refurbish donated computers for distribution to schools throughout B.C.)

    Faced with the speed of change, buying may mean being stuck with obsolete equipment, and for many, leasing may prove an attractive alternative.

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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan