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To Lease or Not to Lease?

University Business, Feb 2011

Computer equipment is an obvious category choice for institutions unfamiliar with leasing. Here are other equipment types worthy of a lease option look:

  • Food service: Campuses with self-operating dining programs don't consider financing as much as they could, says Gary Link of E&I Cooperative Purchasing. While large freezers and ovens aren't replaced too often, they can still be good candidates for financing.
  • Farm: For land-grant institutions in particular, leasing agricultural equipment or farm machinery, such as John Deere tractors, may be the right approach, Link says.
  • Medical: "X-ray equipment, or almost anything in the healthcare field where technology is advancing too quickly, is clearly an area you don't want to buy," says David Jones of the Coalition for College Cost Savings. "In two years, your competition is going to have something newer than you and you're going to have to keep up."
  • Security: It's an area that institutions could probably be doing more leasing in, according to Link, who points to security cameras, emergency broadcasting equipment or signage, and electronic access equipment as examples.
  • Furniture: "It doesn't often jump to people's minds that it might be an opportunity for leasing, but we've found it in the past to be very strategic," says Jones. Rather than all furniture, he's referring to items placed in public areas of key buildings on campus, such as recruitment offices, development areas, and perhaps front rooms in dorms, "where you want things to look fresh and new."

What about vehicle fleets? While car leases are quite common among consumers and campuses that outsource their fleet management certainly have both lease and own options, Link says leasing doesn't exactly fit the recent economic situation. Over the past three years, he has seen institutions keeping their cars longer than in the past. Jones says, "If you think about a vehicle that moves in the confined space of a university campus where the trips are only a mile or two at a time, it can take a long, long time for those vehicles to get 60,000 or 70,000 miles on them. As a result, it's much better to buy than to lease."