Mar 4, 2024

A Comprehensive Guide to Leasing vs Buying Your Business Equipment

Discover the best deal for your business between leasing and buying equipment. Explore the pros and cons of leasing vs. buying equipment to make an informed decision and maximise your ROI.

A Comprehensive Guide to Leasing vs Buying Your Business Equipment


Today, businesses have multiple options to finance equipment purchases, providing flexibility in managing capital and cash flow. In this article, we will discuss the two most common payment models, Outright Purchase and Leasing. We will analyze the benefits and drawbacks of both options, compare the costs of purchasing versus leasing equipment, and determine what it will take for teams to oversee daily operations. We will discuss the necessary elements for drafting a lease agreement and avoiding legal hazards. Finally, we will discuss the additional benefits that can be realized by selecting the most suitable leasing partner in India.

In this guide, we delve deeper into these factors by considering a leasing option provided by WiseMonk. This option allows businesses to pay 30% of the equipment cost annually for three years, and an opportunity to buy the equipment at 10% at the end. We'll compare this to outright buying to give you a more comprehensive understanding.

Outright Purchase

Outright purchase of equipment refers to the practice of acquiring equipment by paying the full cost upfront, without any financing or leasing arrangements. Following are the advantages and disadvantages of purchasing equipment upfront.


  • Immediate ownership and control of the equipment
  • Full flexibility to use, modify, or sell the asset
  • Potential tax deductions and depreciation benefits
  • No long-term financial commitments


  • Higher upfront costs
  • Depreciation can impact the equipment's value
  • Maintenance and repair costs are the buyer's responsibility
  • May require additional investments for upgrades
  • Limited flexibility to adapt to changing technology


Leasing equipment is a popular option for businesses that prefer to avoid the upfront costs associated with purchasing equipment outright. Through leasing, companies can acquire the necessary equipment by making regular lease payments over a predetermined period of time. Following are the advantages and disadvantages of leasing equipment.


  • Lower upfront costs and improved cash flow
  • Zero-hassle of selling obsolete equipment
  • Flexibility to upgrade or replace equipment
  • Maintenance and support often included
  • Lease payments are deductible as expenses
  • Option to keep laptop at the end of the term often included


  • No ownership rights during the lease term
  • Long-term costs may exceed equipment's value
  • Dependency on the lessor's financial stability
  • Limited customization or modification options
  • Potential penalties for early termination
  • Lesser control over equipment's maintenance and repairs

Different Leasing Models in India

In India, the following leasing models are very popular across industries. 

Table showing different leasing models and their differentiating factors.

Operational leasing of equipment is a widely adopted approach by businesses, wherein companies lease equipment for a specific duration to fulfill their operational needs. This leasing model offers several advantages.

  • Businesses get access to the required equipment without incurring the upfront costs associated with purchasing it. It helps preserve their capital and maintain a healthy cash flow for other critical expenses. 
  • Provides flexibility, as companies can easily upgrade or replace the equipment as per their evolving requirements. It also eliminates the burden of equipment maintenance and repairs, as these responsibilities typically lie with the lessor. 
  • Provides businesses with the opportunity to stay up-to-date with the latest technological advancements, as they can switch to newer and more advanced equipment at the end of the lease term. 

Overall, operational leasing of equipment offers businesses the flexibility, cost-effectiveness, and technological edge required to thrive in today's competitive market. However, it is essential for companies to carefully consider the terms and conditions of the lease agreement, including lease duration, monthly payments, and potential penalties for early termination. We will understand these things in detail in subsequent sections.

Cash Flow: Leasing requires significantly less cash upfront than buying, which can be a lifesaver for cash-strapped businesses. The predictable monthly payments can also aid in budgeting and financial planning.

Total Cost of Ownership (TCO): Over the term of the lease, you'll typically end up paying more than the equipment's actual cost due to the leasing company's financing charges. If you opt for the buyout at the end, the TCO can increase even further.

However, Wisemonk’s lease terms typically allow our customers to have net savings of 14.56% on your overall equipment cost.

*the net savings from leasing may vary depending upon discount rates, leasing terms and salvage value.

Net Present Value (NPV): Considering the time value of money, leasing often results in a lower or negative NPV due to the recurring outflow of lease payments and the potential buyout cost. On the other hand, buying equipment can result in a higher NPV since the equipment becomes an asset.

Up-to-Date Technology: Leasing can be particularly advantageous if your business relies on using the most recent technology. It allows for an easy equipment upgrade at the end of the lease term without the hassle of selling old equipment.

Maintenance: Lease agreements often include maintenance, reducing the responsibility and potential costs for your business.

Tax Implications: Both leasing and buying offer tax benefits. Lease payments are usually tax-deductible as a business expense. Meanwhile, if you buy the equipment, you can claim depreciation.

End of Term: At the end of a lease, you have the flexibility to return the equipment, continue the lease, or buy the equipment outright. If you own the equipment, you can choose to keep using it, sell

Comparison of the different leasing features for Wisemonk and other leasing companies.

Understanding Lease Agreements and Key Considerations

In order to ensure that the company is benefiting from leasing equipment, businesses should thoroughly evaluate the terms and conditions of the lease agreement, including interest rates, fees, buyout options, and any potential penalties or hidden costs. In this section, we have detailed what factors should be considered when drafting a lease agreement.

Definition and Parties: Defines the lessor (equipment owner) and the lessee (equipment user). It is important to clearly identify and specify the parties involved.

Lease Term: Defines all important aspects of the lease, including the start date and duration of the lease. Clearly outlining these terms avoids misunderstandings and disputes (E.g., how should parties act in case the lease is terminated prematurely) 

There should be a section accurately describing the leased equipment(s) in the agreement, including details such as make, model, and identification numbers. The equipment's condition, maintenance responsibilities, and inspection protocols should be explicitly mentioned as well.

Lease Payments: Defines the payment schedule as mutually agreed between the parties. It is important to mention:

  • Agreed payment to be paid for using the equipment
  • Duration between 2 installments (E.g.,  monthly/ yearly)
  • Payment clearance date (E.g., 7 days from the date of invoice)

Ownership and Title of the Equipment: The ownership of the equipment is never transferred during the lease term. This will be mentioned explicitly in the agreement. If there is an option for an end-of-term buyout, the same needs be mentioned in this section.

Option to Purchase: If the parties have agreed to transfer the asset at the end of the lease term, the Lessee shall receive the equipment after payment of all invoices due. It should be clarified that the lessor retains ownership and title to the equipment throughout the lease term. Any discussion related to ownership transfer options or purchase rights at the end of the lease should be mentioned clearly.

Delivery and Installation: The lessor must ensure that the equipment is delivered to the lessee's specified address when leasing the equipment. If there are multiple delivery locations, the lessor must be able to deliver the equipment to the designated location in a secure manner. There should be an appropriate communication channel between the parties to ensure that the equipment is delivered on time and in working condition and that the address is correct. If special software programs are to be installed, this should be specified in the contract.

Maintenance and Repairs: The scope of maintenance is contingent on the leased equipment. In the case of new equipment covered by a manufacturer's warranty, the lessee must typically ensure that the equipment is not being mishandled and visit the service center for any necessary repairs or issues. Typically, the manufacturer's warranty on new equipment covers:

  • Defects in materials
  • Defects in workmanship
  • Failure to meet performance standards
  • Defective products

What is not included:

  • Software issues
  • Accidental damage (E.g., Liquid damages, Cosmetic defects)
  • Consumable parts (E.g., Reduced battery performance)

Lessors typically offer service support (at an additional cost) if the leased product is not covered by a manufacturer's warranty. In the agreement, the parties' arrangements for the maintenance of such products should be specified in detail.

Wisemonk’s equipment lease terms:

At WiseMonk, we're committed to offering flexible and attractive leasing terms that accommodate the unique needs of our customers. Especially for our Employer of Record (EOR) customers who manage their payroll through us, we offer highly competitive lease terms.

30-30-30 Payment Terms: Our leasing program is structured to spread the cost evenly over 3 years. You pay 30% of the equipment cost every year, making it a predictable expense that can easily be budgeted for.

Let us assume you are planning to purchase a laptop worth Rs. 1,00,000. The same laptop is available through Wisemonk, under the following lease terms.

Purchase Option: At the end of the three-year lease, you have an exclusive option to purchase the equipment outright for just 10% of its original cost. This provides the flexibility of owning the equipment if it's still providing value to your business.

In the above example, at the end of 3 years, you have an option to purchase the laptop at Rs 10,000.

Counteroffer Based on Market Value: We believe in fair and transparent pricing. That's why, at the end of the lease period, we often provide a counteroffer that considers the current market resale value of the equipment. This means you always get a deal that's grounded in real-world value, not just arbitrary numbers.

Additional Benefits with WiseMonk:

When weighing the leasing versus buying decision, it's crucial to consider not only the financial implications but also the overall service experience. Here at WiseMonk, we offer several additional services that significantly enhance our leasing proposition:

Equipment Transfer Coordination: We understand that the logistics of equipment transfer can be a hassle. That's why we offer to coordinate the transfer of equipment from the manufacturer or previous lessee to your premises, ensuring a smooth transition that lets you focus on what you do best - running your business.

Free Interim Vault Storage: There can be a gap between when you lease equipment and when you're ready to deploy it. To bridge this gap, WiseMonk offers free interim vault storage. This means your equipment is safe, secure, and ready for delivery when you are.

Delivery Logistics Tracking: For real-time information at your fingertips, we offer delivery logistics tracking. With this level of transparency, you can effortlessly stay informed about the whereabouts of your equipment and precisely anticipate its arrival time.

In summary, the above lease terms combined with our additional services make WiseMonk's leasing proposition not just financially sound, but also an overall convenient and stress-free experience. We're here to support your business growth and success every step of the way.

Book a call with one of our leasing experts today.


Is it better to lease a laptop?

A laptop lease makes sense when you want to avoid a large upfront investment and maintain low monthly payments. This serves best if you are planning to change / upgrade your office laptops every 2 to 3 years.

How does leasing a laptop work?

Leasing a laptop involves entering into an agreement with a leasing company, such as Wisemonk, where you pay regular installments for the use of the laptop over a specified period. The leasing company retains ownership of the laptop, while you have the right to use it. At the end of the lease term, you can typically choose to return the laptop, upgrade to a newer model, or purchase the laptop at a predetermined price.

How long is a laptop lease?

Laptop leases commonly span from 1 to 5 years, but the exact lease duration varies based on the leasing company and the specific agreement. At Wisemonk, we offer a leasing duration of 3 years, aligning with the typical lifecycle of a new laptop.

Can I finance a laptop?

Yes, but it may be difficult to find an affordable loan to purchase your new laptop, computer or any IT equipment.

What are the disadvantages of a refurbished laptop?

Someone has already used your laptop. So if you buy refurbished laptops, you may notice reduced performance, limited warranty coverage, older technology, damages to the original hardware and many more. When considering a refurbished laptop, it's important to weigh these disadvantages against the potential cost savings and the reputation of the refurbishing source.

Which laptops are available for leasing?

All top brands such as Dell, HP, Apple, Microsoft Windows, Lenovo are available for leasing. You can contact the Wisemonk team to discuss your business needs and budget.

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