Leasing: The Benefits
. Leasing keeps your equipment up-to-date. Fusion splicers, certifiers, and other technology equipment eventually become obsolete. With leasing, you transfer the financial burden of obsolescence to the equipment leasing company. For example, let's say you have a two-year lease for a fusion splicer. When the lease expires, you're free to lease any fusion splicer that's newer, faster, and cheaper. It's estimated that 65 percent of respondents in telecom equipment leasing surveys said that the advantage of having the latest equipment was the number one perceived benefit of leasing.

You'll have predictable monthly expenses. With a lease, you have a predetermined monthly amount, which can help you budget more effectively. Thirty-five percent of those surveyed confirmed this as the second-highest benefit of leasing.
You don't pay anything upfront. Many small businesses struggle with cash flow and need to keep their coffers as full as possible. Because leases rarely require a down payment, you can acquire new equipment without dipping into much-needed funds.
You can more easily keep up with your competitors. Leasing can allow your small business to acquire sophisticated technology, such as a network certifier, that would otherwise be impossible. The result: You can keep pace with your larger competitors without depleting your financial resources.

Renting: The Disadvantages
. You'll pay more in the long run. Ultimately, renting is almost always more expensive than buying. For example, a €4,000 fiber optic fusion splicer could end up costing a total of €5,760 if rented for three years at €160 per month, but only €4,000 (plus VAT) if purchased outright.
You're obligated to keep paying even if you stop using the equipment. Depending on the terms of the rental agreement, you may have to make payments throughout the entire rental period, even if you no longer need the splicer, which could happen if your business changes.

Buying: The Benefits
. It's easier than leasing. Buying equipment is easy—you decide what you need, then go out and buy it. However, leasing involves at least some paperwork, as leasing companies often require detailed and up-to-date financial information. They may also ask how and where the leased equipment will be used. In addition, lease terms can be complicated to negotiate. And if you don't negotiate properly, you could end up paying more than you should or with unfavorable terms.
You make the maintenance decisions. Equipment leases often require you to maintain the equipment according to the leasing company's specifications, and that can be costly. When you buy the equipment outright, you determine the maintenance schedule yourself.
Your equipment is depreciable. Regulations allow you to allocate a portion to asset depreciation until it is fully depreciated. This amount reduces your profit at the end of the year. With most lease agreements favored by small businesses, called operating leases, you can only deduct the monthly payment.

Purchase: The Disadvantages.
The initial outlay for the necessary equipment can be too high. Your company may need lines of credit or a large cash outlay to acquire the equipment it needs. Those lines of credit and funds could be used for other items such as marketing, advertising, or other functions that can help grow your business.
Over time, you will be forced to use outdated equipment. As I mentioned earlier, telecommunications technology becomes obsolete quickly. A growing small business may need to refresh its technology in some areas every 18 months. That means you will eventually be left with outdated equipment that you must donate, sell, or recycle.

Asking the Right Questions:
If you're thinking about renting equipment, you'll need to do your research to ensure you get the best terms. Here are some questions to help you get started:

What type of lease are you being asked to sign? A capital lease or an operating lease? A capital lease is similar to a loan. With this type of lease, the equipment is considered an asset on your balance sheet, and you get the benefits—such as tax depreciation—and the risks—including obsolescence—of ownership. Capital leases are typically for up to five years.
With an operating lease, the leasing company retains ownership, and for tax purposes, the equipment is considered a monthly operating expense rather than a depreciable asset. Operating leases are generally more popular with small businesses because they don't tie up cash and are usually short-term: three years or less.

Is there a purchase option? Sometimes you can choose between a market residual value option and a one-euro purchase option. The residual value option means you can buy the equipment at the end of the lease for its market value, which could be hundreds of euros. In contrast, a one-euro purchase option means the equipment is yours for one euro when the lease expires. And while it sounds like the better option, keep in mind that monthly payments for leases with residual value are generally lower than those for leases with a one-euro purchase option. If you're fairly certain you'll want to upgrade to the new technology when the lease expires, opt for the residual value option.

How long is the lease? Technology equipment leases typically run for 24, 36, or 48 months. The longer the lease, the lower the monthly payments, but you'll likely pay more over time with a longer lease. Does
the equipment need to be insured? Some rental companies require you to insure the leased equipment. If you don't, fees may be added to your monthly payment to cover insurance.

Can I terminate my rental agreement early? What if you no longer need the equipment you're renting, or if you want to upgrade to newer technology sooner than expected? Find out in advance if you can cancel your rental agreement early and if there's an early termination fee (and if so, how much).

Ultimately, a few simple rules can help you decide whether to lease or buy. If your equipment needs are relatively small and you have the money—or can get a low-interest loan—then buy it. You'll save money in the long run. However, if you need a substantial amount of equipment, such as fusion splicers or certifiers for the 10 employees of your new company, leasing might be a better option. After all, why tie up a large amount of cash, especially when you could use that money to establish or grow your business?

RENTAL
Ideal for short-term, temporary equipment needs.
- Temporary, short-term, seasonal work needs or needs outside your normal scope. (Daily, weekly, monthly)
- Try various brands and models before buying.
- Replace equipment during maintenance and repair of your own equipment.
- Subsidies or legal restrictions prohibiting the purchase or rental of equipment.
- Continuous access to the latest technology.

FINANCING
Lower monthly payments for long-term equipment needs.
- Easily affordable monthly rates. (24, 36, 48, 60-month options)
- Provides easy budgeting and cash flow management.
- Many leases include maintenance and repair.
- Most leases offer tax benefits, but consult your tax professional for details.

LEASE TO OWNERSHIP
Make low monthly payments and own the equipment at the end of the lease term.
- Easily affordable monthly rates. (24, 36, 48, 60-month options)
- Provides easy budgeting and cash flow management.
- Many leases include maintenance and repair.
- Most leases offer tax benefits, but consult your tax professional for details.
- It's yours at the end of the lease.