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Should I Lease or Buy Electrical Goods?

Whether you’re looking to be more circular in the home or within your business, this article is relevant to ​you. One way to support the transition to a circular economy is through how you purchase electrical ​goods. In fact, your decision whether to rent or buy your new computer or that dishwasher is more ​critical than ever with the choice impacting both your wallet and your contribution to a sustainable, ​circular economy.

The “I must own it” Approach

The Pros:

1. Potentially more economical in the long-run: Traditionally, we’ve been conditioned that to enjoy a ​product, we must own it. It does, of course, provide long-term cost savings. Despite the higher initial ​cost, it can be more economical in the long run, especially for good quality appliances with longer life ​spans like dishwashers or refrigerators.
   
2. Product control: When you buy something, it gives you full control over the product - you’re not ​bound by pesky rental agreements and you can use it however you want without having to worry ​about wear and tear penalties.
   
3. Customisation & personalisation: Ownership gives you the freedom to customise and personalise ​your product according to your specific needs, which can be of particular importance for businesses ​with specialised requirements.
   

The Cons:

1. Environmental damage: When our dishwasher breaks down for the umteenth time, we often default ​to throwing it out and replacing it with a new one. This causes significant environmental damage.
   
2. High Initial Costs: A large initial cost to purchase (often leaving many in personal debt.)
   
3. Depreciation & Obsolescence: Electrical goods depreciate rapidly and become obsolete due to ​advances in technology. Replacing equipment to have the latest technology ends up costing more in ​the long term.
   
4. Maintenance & Repair Costs: Owning electrical goods means you are responsible for all ​maintenance and repair costs, which are hard to predict and often costly, especially after the ​warranty expires.
   
5. Lack of Flexibility: There’s no flexibility to upgrade or change equipment according to your latest ​needs or technology. You’re stuck with what you’ve got.
   
6. Resale is a Hassle: Trying to resell the electronics can be a nightmare and oftentimes doesn’t lead to ​a satisfying return.
   
7. Insurance & Liability: Owners are responsible for insuring their owned equipment (another cost) or ​copping the full replacement cost if stolen or damaged without insurance.
   
8. Tax Inefficient: For businesses, purchasing equipment can be less tax-efficient compared to leasing. ​Oftentimes, lease payments are fully deductible as business expenses whereas rent owned goods ​typically depreciate over time.
   
9. Tied-up Capital: Another one for businesses - the capital you have tied up in purchasing equipment ​could be better spent elsewhere in core business operations or for growth opportunities.
   

The Leasing Approach

The Pros:

1. Stay up-to-date with Technology: Technology evolves so rapidly. As soon as you’ve bought the ​latest version, you’re already behind. Leasing equipment allows you to keep up without the hefty ​investment. For things like computers, smartphones or office equipment which become outdated ​quickly, leasing offers an opportunity to upgrade regularly, ensuring you have the latest technology ​without the cost of purchasing new.
   
2. Lower Upfront Costs: Leasing reduces initial capital investment, particularly beneficial for startups or ​individuals on a budget. It allows for the use of high-quality, efficient appliances without a large ​upfront payment, easing cash flow constraints.
   
3. Predictable Expenses: Leasing creates predictable monthly costs, simplifying budget management. ​This is especially advantageous for businesses that need to allocate resources carefully and avoid ​unexpected expenses from purchasing new or replacing old equipment.
   
4. Goodbye Maintenance & Repair Costs! Rental agreements often include maintenance and repair ​services, reducing the worry and additional costs associated with the upkeep of the equipment.
   

The Cons:

1. Potential Higher Long-term Costs: Over time, the total amount paid in leasing fees can exceed the ​cost of purchasing the item outright, especially for long-term leases or for equipment with a longer ​lifespan.
   
2. No Ownership Equity: At the end of the least agreement, you do not own the equipment. This means ​you can’t recoup any of the costs through resale and you don’t build equity in any assets.
   
3. Contractual Obligations & Restrictions: Contractual obligations that come with leasing can be ​restrictive. You are bound to the terms of the lease, which may include limitations on how and where ​you can use the equipment.
   
4. Dependency on the Lessor for Repairs & Maintenance: While maintenance is often included in ​leasing agreements, this also means you’re dependent on the lessor for these services. The quality ​and timeliness of repairs or maintenance are out of your control.
   
5. Potential for Higher Insurance Costs: Leased equipment may require specific insurance coverage ​as per the lease agreement, potentially leading to higher insurance costs compared to owning the ​equipment.
   
6. Termination & Modification Fees: Ending a lease early or modifying in terms can incur significant ​fees. This lack of flexibility can be a disadvantage if your needs change unexpectedly.
   
7. Limited Customisation: Leased equipment often comes with limited options for customisation, ​which can be a drawback for businesses or individuals with specific needs that off-the-shelf ​equipment can’t meet.
   
8. Long-term Commitment: Leasing typically requires a long-term commitment, which can be a ​disadvantage if your needs change or if you find a better solution elsewhere.
   
9. Overpayment for Short-term Needs: If you need equipment only for a short period, leasing can be ​more expensive than purchasing a used item or renting for a short term.
   

The Final Weigh-in

Leasing equipment provides overwhelming support to a more circular economy by maximising the usage ​of a product through its lifecycle. This approach reduces waste and is more environmental. However, it’s ​crucial to consider the policies of the leasing company regarding the disposal or refurbishment of goods ​at the end of the lease.

For companies, leasing can be a strategic choice to preserve capital for core business activities, ​especially for high-value or rapidly depreciating items. For personal use, the decision might lean towards ​buying, especially for goods that have a longer lifespan and can be used sustainability over several years.

At the end of the day, the decision to rent or buy electrical goods depends on several factors, including ​financial capacity, usage needs and environmental considerations.

At The Waste Not Spot, we understand the importance of making informed, sustainable choices. ​Whether you’re a business or an individual, we offer consultancy services to help you navigate these ​decisions in line with your financial and environmental goals. Contact us for personalised advice on how ​to make choices that benefit both your wallet and the planet!

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