leasing vs. buying service associate member of illinois asbo

Leasing vs. Buying

Service Associate Member of Illinois ASBO

OverviewIntroduction

Leasing Basics

Leasing Benefits

Leasing Programs

Leasing Process

Success Stories

When to Lease & When to Buy

Introduction of Leasing Presenter

Jason MarquardtDirector of SalesAmerican Capital

(630) 512 - 0066 x118jmarquardt@americancapital1.com

What is a lease?

• By definition, a lease is a contract by which one acquires equipment for a specified period of time for a specified rent paid to the lessor.

• For Schools, a lease is a way to acquire and/or finance equipment without voter approval.

• Leasing does not constitute public debt.

What can be leased?

• Computer Hardware

• Software

• Network Equipment

• Printers & Copiers

• Telephone Systems

• And Much More!

What are the benefits?• Conservation of Capital (100% Financing)• Consistent Budget• Avoid Technology Obsolescence

– Minimizes break/fix time– Reduces user/teacher frustration

• Lowest Cost of Funds• Disposal issues eliminated• Asset Management/Tracking

What type of leaseprograms are available?

Fair Market Value

•Lowest Cost of Funds

•Flexible end of lease options

•Ideal in setting up an equipment replacement program

$1 Purchase Option

•Often a tax-exempt lease

•Fixed ownership at the end of the lease

•Ideal for infrastructure or software projects.

Leasing Process

• Obtain planning costs

• Select equipment supplier & lessor

• Board approval

• Documentation

• Equipment ordering & delivery

• Acceptance and Lease Commencement

Success Stories

• Local K-12 School District– Challenge: Technology obsolescence and

increasing technology staff costs– Solution: 3 year refresh program– Benefits: Less staff time spent on break-fix

work. Students and Teachers no longer dealing with obsolete equipment.

Success Stories

• Local K-12 School District– Challenge: Large technology acquisition

needed on a limited budget– Solution: 5 year tax-exempt lease– Benefits: Low payments spread out over 5

years and structured to keep the technology budget level

When to Lease & When to Buy

• When to Lease– Desire consistent budget– Desire to conserve capital– Desire to maintain current technology

• When to Buy– Desire to self manage technology refreshment

cycle– Excess capital available to spend