How can some companies, especially simple startups, afford expensive coffee makers in their offices? Heck, what about the printers, air purifiers and entertainment centers? Well, what if we told you there was a way to afford these items without paying the full price?
Introducing leasing and hire purchase options!
Leasing and hire purchase are two common methods of acquiring an asset without paying the full purchase price upfront. While both methods involve paying for an asset over a period of time, there are some key differences between the two.
What is leasing?
Leasing basically means paying a certain fee every month to have the right to use a machine or equipment either at your house or company. However, the ownership still lies with the lessor (the organisation that provided you – known as the lessee – with the equipment), so do take note that once you stop paying, the best you can do is watch them come to your home or office to take away the coffee machine or printer.
However, as long as you continue to pay your monthly fees, the lessor is responsible for the maintenance and repair of the asset. Lastly, unless there is an option to purchase, at the end of the lease period, the asset must be returned to the lessor.
What is hire purchasing?
In a hire purchase agreement, the asset owner (seller) agrees to sell the asset to the buyer (hirer) in exchange for regular payments. The hirer takes ownership of the asset once all payments are made, which is usually done through a lump-sum payment at the end of the term.
The hirer is responsible for the maintenance and repair of the asset once ownership is transferred.
How important is ownership to you?
While there are slight differences with flexibility of repayment plans and degree of responsibility, the main difference between leasing and hire purchase is ownership.
With leasing, the lessee does not own the asset and returns it to the lessor at the end of the term. With hire purchase, the hirer takes ownership of the asset once all payments are made. Both methods have their advantages and disadvantages, and the choice between the two depends on factors such as the asset being acquired, the buyer’s financial situation, and the desired level of flexibility.
Both these methods might be a double-edged sword as they will require you to commit every month and pay a minimum required amount. So do think carefully as this would be a long-term commitment. If you are interested, you can read more about loans and mortgages here.
Now that you understand how to more easily get necessary office equipment, we hope you’re not going to splurge on unnecessary items!