Whether you’re in the early stages of your startup or in need of new devices to facilitate an expansion, there are many considerations to be made in how you’ll pay for your equipment. One option that can allow you to get the equipment you need even if you don’t have the money to pay for it all at once is financing technology and paying it off over time.
Of course, this option has many attractive aspects to it:
- Free up capital for other current expenses
- Provides opportunities to grow quickly and try new technologies
- Tax benefits of offsetting earnings by paying qualified expenses over time
Whatever your reason for wanting to finance your tech purchases, you need to understand what you’re getting into before signing on the dotted line. One general rule of thumb: Financing should always be considered somewhat of a last resort. If you have the money to pay now, there is generally benefit in doing so.
However, for those situations where financing a tech purchase makes sense to finance technology for your business, you should consider the following:
Understand the terms
It’s important that you actually read the fine print when getting ready to finance. Yes, it’s easy to understand the basics of what you’re agreeing to: They give you the product and you pay back the agreed upon installments until you’re done. Then you own it.
However, you’re going to want to know what the penalties are for missing payments, and let’s hope it never comes to this, defaulting. Financing your tech purchases does come with risks, and without being aware of those risks, it can be another opportunity to find yourself financially under water.
Examine all your options
If you are making the decision to finance your tech purchases, then you are likely in a position where you need to save money. In this case, it is even more important than usual to do your homework and compare the financing options that are available to you.
There are many organizations that are willing to loan you money to finance your tech purchase, but the terms they offer vary greatly. You will find that most people qualify for tech financing regardless of credit status so the terms can be quite aggressive when it comes to fees and interest.
Don’t get carried away
When financing a tech purchase, it’s easy to focus on the money you are saving upfront and overspend. Even if the monthly payments aren’t much different, every dollar counts so you should still be frugal in how you approach which piece of technology you choose.
Another important consideration is the lifespan of the item or service versus the lifespan of the financing terms. It is recommended that you update your business computers every 3 to 5 years to ensure you are providing your staff the most current technology available, but if you’re financing tech with terms longer than 3 to 5 years, you’re setting yourself up to fall behind on the times.
Alternative: DaaS
A popular alternative to financing has emerged in recent years that allows you to keep your business up to date with the latest technologies without getting into troublesome financing and loan agreements. This option, called Device as a Service (or DaaS), allows you to pay a monthly subscription fee in exchange for devices.
With a DaaS plan, you get access to the devices you need at a cost that fits a tight budget, plus you generally will receive a support plan through the device provider. Keep in mind, at the end of the day, you will be returning these pieces of equipment to the provider, so it’s in their best interest for you to take good care. Therefore, if you have an issue with the equipment, you will have the option to have it repaired as part of your plan, which can be a huge bonus.
Have you ever leveraged DaaS at your organization? Have questions about financing options at LenovoPRO? Please leave a note in the comments below!
Do you want to see more DaaS and financing content? Mention that in the comments below too!
Additional Spotlight ROI resources
Don’t forget to checkout our full week of extra coverage on how your small business can maximize its investments.
- Welcome to Spotlight ROI: Calendar of events
- Best Tools – LenovoPRO Staff Picks
- Do you really need that?
- Small Business Tech Buying Guide (2021)
- Best Financial Advice from the Community
- ROI - Advice from the Community
- Caring for Your PCs: Tips & Best Practices
- How to Make the Most of Collaboration Software
- Small Business Holiday Buying Guide
For more about DaaS, click here to read LenovoPRO Community’s recent Tech101 article and click here for information on Lenovo’s DaaS solutions.