Leasing vs Buying
Leasing is not automatically cheaper than buying, and buying is not automatically better value. Which one wins depends on a small number of factors. Here they are.
It is not cost.
Over a long enough horizon, ownership is usually cheaper in absolute rupees. The reason leasing often still wins is that it moves three things off your plate: the capital outlay, the resale risk, and the administration. Whether that trade is worth it depends on your business.
Capital and currency matter more than ownership.
- Capital is better deployed in the business than in an asset
- The asset dates quickly, as IT hardware does
- You want a predictable monthly cost rather than lumpy capex
- You do not want to manage resale or disposal
- The fleet or estate is large enough that administration is a real cost
- You replace assets on a regular, planned cycle
Ownership earns its keep.
- You will hold the asset well beyond its financed life
- Usage is heavy or unpredictable, which makes lease terms expensive
- The asset holds value well and resale is straightforward
- You have surplus capital with no better use
- You only need one or two units and administration is trivial
Before you decide either way.
A low monthly figure can hide a long tenure or a heavy end-of-term charge. Always compare total outflow across the same period.
The residual drives the monthly cost. An optimistic residual makes a quote look good and can produce a painful end-of-term settlement.
This is where end-of-lease disputes come from. It should be defined in writing before you sign, not assessed by opinion afterwards.
Early termination charges vary enormously between lessors. Ask the number, not the policy.
Bundled maintenance is not the same as comprehensive cover. Get the inclusion list rather than the label.
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