Leasing IT equipment rates...

December 23, 2010 8:41 AM

My company is looking at leasing IT equipment for the first time. We've gotten several quotes, but the rates appear to be rather high. Considering we have excellent credit, what interest rate range should we be looking at for a $100K lease for 36 months? If it matters, the equipment is CISCO routers and switches. Thanks!
posted by flipmiester99 to Work & Money (8 answers total)

What's the buyout? $10 at the end or something like that, or significant? There will be a difference between leasing-as-financing and leasing-planning-to-give-it-back-at-the-end.
posted by mendel at 8:58 AM on December 23, 2010

Are you installing these in a data center or at your own premises?

You should be able to get equipment in this price range interest-free from a managed hosting provider if you are installing this in a data center or from a network or systems integrator if you are installing them at your own site.
posted by yoz420 at 9:03 AM on December 23, 2010

Response by poster: We have quotes for FMV and $1 buyout from several leasing companies. Obviously the $1 buyout is going to cost more per month. What we are curious about is the *rate* other companies receive.
posted by flipmiester99 at 9:04 AM on December 23, 2010

I work mostly with desktop hardware leases, so your rate may vary somewhat based on the projected resale value of the equipment at lease end. With that caveat, I'd expect to be in the range of about 0.029 to 0.031 monthly for your lease rate (monthly payment = purchase dollar amount * rate). There are tons of what-if's; for example, many vendors will give you a lower rate if you pay quarterly instead of monthly. Our rates also take into account a number of terms we've negotiated for our leases, such as limited liability for return freight, FMV=15%, etc. Which brings up a more important point: the biggest cost consideration is probably not the rate, but making certain that you deal with a reputable vendor and negotiate your terms. As an example, unless it gets you a much lower rate you definitely do not want to pay a "restocking" fee. I know of at least one vendor that has a reputation for proposing a low rate but in the fine print they note that it's contingent on approval from their lender; they collect a "good faith" deposit from you, then announce that the rate they were hoping to give hasn't been approved and your actual rate will be higher. The kicker is that if you don't accept it, they keep your non-refundable deposit. I don't know whether Cicso has their own lease program but most large vendors do; for that reason only, I'd be tempted to lease through them if it's a one-time shot and you want to avoid the risk of ending up with a shady vendor. Feel free to MeMail me if you'd like to know who we use.
posted by LowellLarson at 11:12 AM on December 23, 2010

What exactly are you trying to do with the CISCO routers and switches it seems very expensive to me if your spending that kind of money on network infrastructure your company should be fairly large and have a qualified networking staff to help you with this question.

If not your probably getting ripped or buying more than your company needs
posted by tke248 at 11:46 AM on December 23, 2010

Side question, apologies for it not being directly on topic. When I've looked at leasing gear it's been short term bridge type stuff to make it until funding comes through or the real gear is shipped from a vendor. In these circumstances and others it's almost always been better to source used gear from an established reseller who will offer the smartnet or similar hardware replacement terms.

For 100k, the gear you're buying can't be anything terribly fancy and it's almost certainly better to buy used for the money. Basedon 100k, you're not looking to source anything at the terribly high end (Nexus, ACE Appliance, ASA 5580's, etc), going used makes sense, you'll find a lot of value there and can do it in a way where you don't give up any warranty or support.
posted by iamabot at 12:36 PM on December 23, 2010

Are you, perchance, bolting the phone system into this?
posted by Thistledown at 1:57 PM on December 23, 2010

Does the lease include maintenance? That's going to be a huge difference.
posted by gjc at 5:48 AM on December 24, 2010