Does leasing technology cost more than paying cash?

This is a common question and it makes sense. The obvious thought process leads us to the conclusion that financing will cost more than cash because we all know that virtually nobody can borrow money for free. It’s not that simple, though. Depending upon your business and specific situation, paying cash may cost you more money in the long run. Let’s dig into that a bit further.

Jean-Paul Getty, the founder of the Getty Oil Company and also once the richest man in the world once said

“Lease that which depreciates. Buy that which appreciates.”

Like many successful business leaders, he understood that paying for assets with cash is typically not as lucrative as using your cash to make more money. This is especially true if the assets are sure to depreciate or the business has no plan to utilize the assets at the end of a certain term. We can see examples of this in companies like Microsoft and Apple who both recently financed major projects with significant amounts of cash in the bank.

When you’re approaching your next technology project, consider when the time comes that your new technology becomes obsolete and you’re preparing to upgrade, is the old technology worth owning, or would the process be easier to simply trade in what is no longer useful in exchange for what is needed at the moment. Combine that advantage with an easy-to-budget monthly payment that empowers you to keep the majority of your cash on hand for investing, hiring, marketing, etc. It’s for these reasons that although leasing technology isn’t the perfect fit for everyone, it may be a good fit for you and is worth consideration.

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Keywords: Alternative Financing, Great America, Leasing, Financing