Hire Purchase Vs Leasing

Are you familiar with the type of loan you are holding for your existing photocopy machine? These are one of the most commonly ask questions during a sales appointment. However, It is not surprising to see customer stumble over this question even after going through few round of copier upgrading.

At the outlook, it might be insignificant to copier shoppers since most of us usually only pay attention to the monthly expenses. In contrary, the different are huge and worth considering.

 

Hire Purchase

Hire purchase is a type of loan that we are most familiar with because it is usually associate with our car loan. Buyer adopting a hire purchase has ownership of their loaned equipment after completing their term plan.

Unlike in the past, it is popular recently because of the benefit come from the government ‘s pic scheme first introduce in 2012. Because,  such loan grants ownership of the loaned equipment, copier buyer now can enjoy subsidies during the full loan period.

If there are no more grant, should I go for hire purchase?

It is subjective because it depends on your service maintenance agreement with your supplier. Most copier vendors offer maximum 5 years of service warranty for your photocopier.

In other words, after 5 years, you are left with a “white elephant” that can only be used as a display piece in your office. There won’t be any support for toner or spare part. You might feel the same way as I do. It is such a waste! However as far as technology are concerned, just like your home 59-inch plasma tv, It depreciates faster than your smartphone & turns obsolete in a few years.

If you are able to negotiate for a longer service agreement term for your copier machine, than hire purchase may make sense.

 

2. Leasing 

Leasing is a loan type that does not grant ownership at the end of the lease. It has lower interest rate than hire purchase and is one of the most popular choices before “pic” came into the picture. Such loan is considered flexible because of the lower interest rates and it is more economical to upgrade your copier with your existing leasing loan vs a hire purchase.A point to note, unless it is necessary or you got a good offer during the promotion period, else frequent upgrade before the lease expires will only cause you to pay more in your next lease cycle.

You may already know that there is 2 type of leasing in practice. The first type is referred as “pure lease”. This is a type of lease that is more commonly practiced and understood by the customer.  As the name indicated, the monthly loan amount and the lease period is all you need to pay attention to.

Another type of lease which is less mainstream normally referred as “lease”, while some also called it a loan with balloon scheme.  In practice, they are similar to “pure lease” except the fact that there is a residual value at the end of the loan period.

Like all loans, it requires a long-term commitment and unless you have done our math and know what you are doing, else it is economical to rent a copier with a flexible term.