Rent vs. Buy Decision

When looking at the Rent vs. buy decision, there are a number of key factors which sway it in the favor of an outright purchase.
The first of these is that the company has the cash freely available and there is no need to look at a rental. Coupled to this is the fact that once I you have purchased the equipment; the ownership is yours and you can depreciate the value of it over time, thus improving your Return On Assets Ratio.
The second major reason which supports a cash purchase is that it is far easier than having to engage with a rental agency signing contracts and reading through terms and conditions.
And lastly, the third major reason why organizations support a cash equipment purchase is because they have had an unfortunate experience with a rental agency and are disinclined to risk this option again and feel more comfortable with a cash purchase.

As a response to this, sound reasoning dependant on an organizations circumstances, can push the balance in favor of a rental solution.
The first of which is cash flow, an organization needs to weigh up the opportunity cost of investing in valuable cash in technology, business infrastructure, or in other areas where they can see a greater return. A rental solution eases the pressure of South Africa’s current economic climate on an organization by allowing them to easily budget for the future and keep much needed cash flowing. On this same point, by making use of a rental solution, the organization is given flexibility to upgrade to the latest equipment as and when needed, instead of having to sweat the equipment for between 5 to 10 years in order to depreciate it to an acceptable level.
When choosing a rental partner, it is important to ensure that you become intimately familiar with, and understand their documentation and contracts as very often a bad experience stems from here. It is Spartan’s (http://www.spartan.co.za/) philosophy to ensure complete transparency of rental contracts and fees in order to ensure that our customer relations are retained and remain healthy.”