Pros and Cons of Lease vs Buy for Cisco and Juniper Networks

Coastside Networking buys/sells
used/refurbished Cisco, Juniper & Netscreen

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Pros and Cons of Leasing versus Buying

The following points are not givens and are meant to merely illustrate what can happen. In most instances, these factors can be mitigated or altogether eliminated by careful planning. As an example, a possible disadvantage of leasing is that the equipment must be either returned or purchased. If a lease is carefully negotiated, then an agreed upon buy out price can be arranged in advance, avoiding network disruption and sticker shock.

Leasing – Advantages of:

Can purchase the latest in technology, i.e., it protects against technological obsolescence.
Will help to conserve capital and allow other capital purchases (up to 100% financing).
Technology leasing is usually accompanied by support. Ask about this upfront.
There can be positive tax advantages and balance sheet benefits (can be as high as 100% deductible).
Current low interest rates are attractive.
Improve your financial ratios.
Leasing will preserve your bank credit lines and working capital.
Leasing plans can be customized. Payments can be tailored to meet cash flow, budget and other cyclical fluctuations in your business cycle such as taxes or seasonal variations.
Leasing can include items besides hardware such as training, maintenance, installation and taxes.
Leasing provides protection against technological obsolescence as product can be traded back.
Flexible payments to match your budget.
On and off balance sheet financing.

Leasing – Disadvantages of:

May be possibly restricted to vendor’s technology. If so, find another leasing company.
Long term contracts may increase costs.
Interest rates often higher than outright purchase.
At end of lease, equipment must either be purchased or returned.

Buying – Advantages of:

Equipment is yours to keep.
Once lease is up, customer has to purchase equipment, risking disruption or return hardware.

Buying – Disadvantages of:

Costs can be forced up due to rapid technological depreciation. Equipment typically valued at 10% of list after 4 years. Thus, a case can be made in favor of leasing used hardware, combining the best of both leasing and acquiring used hardware.
May result in a mix of old and new hardware.
Multiple vendors may result in multiple support platforms and help.