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Buy or Lease a Computer?

by Bill Santry
June 25, 2003

To be or not to be? Where's the beef? Who wrote the book of love? All good questions. But if you're in the market for a new computer, the most pressing question for you might be, "Should I buy or lease?".

In this Help2Go article we'll provide:

  • A simple quiz to help you determine whether leasing or buying is best for you.
  • Some general rules to remember when considering a lease.

Anyone who has glanced at a TV recently has seen one of the numerous ads pitching computer leasing as an alternative to buying. Until the mid-1990s, only business clients leased their hardware from the big information technology suppliers. It made sense for some companies to lease computers if there was the possibility of expansion, downsizing, or some other change in the technology needs of the company.

With the explosion of home ownership of computers, the big PC manufacturers determined that they were ignoring a very lucrative niche in the market. Today, home users can lease PCs from Dell, Gateway, Micron and a host of other manufacturers. Is a lease a good idea? Maybe. But be sure you have considered all of the factors.

The following is a brief quiz that can help you decide if a lease is a viable option. Pencils ready? Let's begin...

What is your current financial situation? (Be honest)
Certainly, if you are short of cash to pay for a new PC upfront, your thoughts may turn to leasing. But consider the following: If you pay $35 per month for 36 months to rent a PC, your total payments will amount to $1260, more than the cost of an average new system. One that you OWN well after 36 months have passed. If your credit card's interest rate is low, it may be better to finance your new computer that way.

Short of cash and have a sky-high interest rate? Leasing puts that new PC on your desk without the worry of an escalating monthly payment. You may choose to buy the computer at the end of your lease, but there will be a fairly substantial charge tacked on, adding to your overall cost.

Do you like having the "latest and greatest" technology?
Companies that lease computers generally offer packages of mid-level technology and don't provide the consumer with much room to customize. You may have a choice of packages, but the higher-end systems (Pentium IV, recordable DVD, 1 GB of RAM) are naturally going to cost you more per month.

If you are a casual PC user, this is not a problem. You will get plenty of computing power for web browsing, word processing and managing your finances.

Are you in a "hand-me-down" situation?
Many first-time PC owners get their systems from friends or family members who are upgrading. If you buy your new computer, you can sell it to a friend in a year or two or give it to your college-bound nephew as a graduation gift. A free or low cost system can be a great way to introduce someone you care about to computers.

On the other end of the spectrum, you may be a college-bound student who needs a PC but doesn't have the money to buy one. Students can often lease PCs for a semester or an entire academic year. You can do all your assignments and not have to lug the beast home with you in May.

Are you a tinker?
If you like the idea of adding memory, upgrading your video card or making other changes to your computer's hardware configuration, you may find a lease too restrictive. If you do make changes to the system, you might have to return it to its original configuration before returning it to the company.

Some leases provide for automatic upgrades on a yearly basis. You continue to make your monthly lease payment, but a newer, better system arrives on your doorstep every twelve months. If you can abide by this schedule, so much the better.

Some Points to Remember

These are a few general guidelines for those considering a leased PC:

1) Read the FINE PRINT. Not all leases are the same.

  • Be sure to compare several offers to ensure you're getting the most for your money.
  • Do not accept a lease that forces you to sign up with a particular Internet service provider as part of the deal. You will often pay inflated charges for your Internet access. Be sure to read our article explaining the ISP Rebate Scam.
  • Make sure the company offers a full warranty.
  • Check to see if automatic system upgrades are possible.

2) Name brand recognition.
We recommend Dell, Gateway, and Sony (for high-end PCs). We've had few complaints, especially from Dell buyers. This does not mean we vouch for their lease deals, but at least you'll know the hardware is reliable. If you see the words Radio Shack or Packard Bell mentioned, move on. If you don't recognize the manufacturer, run away.

3) Factor ALL the charges into your calculations.
It may take some digging, but if you look hard enough, you may find hidden charges. Look out for financing fees, a balloon payment at the end of the lease, and/or warranty charges. Be thorough.

The Last Word

I am not a fan of leasing computers, but we'd like to hear from Help2Go readers on this topic. If you have leased a PC and would like to share your experience (good or bad) with Help2Go and other readers, please post a comment below.

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