Rental or leasing – which is the better option?

IT leasing offers companies full flexibility, while rental is a ready-made product. This maxim sums up the considerable experience of technology management company CHG-MERIDIAN, whose experts are very familiar with both procurement concepts. The difference lies, as so often is the case, in the details.

IT leasing gives companies the option to design their own IT solution. The design can be fully customized to the last detail, and there are no limits on the choice of services, even on an international project. This means that your own IT department, hardware suppliers and service providers can each be integrated into the process. Prices and contracts can be individually negotiated, which makes leasing a very transparent financing model.

This level of flexibility is often not available with rental or as-a-service offerings, as they consist of a ready-made package with defined partners. The advantage here is that contracts can be tied up quickly and that there is a single contact person who manages the process. In this scenario, the customer is not interested in purchase prices, as they pay a fixed monthly instalment. If the provider offers additional services such as equipment delivery or claims handling, then the burden on the customers’ own IT department is reduced even more.

There are also legal differences between rental and leasing. In Germany, the provision of IT hardware for a fixed period for a rental payment is regulated by section 535 et seq. of the German Civil Code (BGB). Leasing, on the other hand, is a purely financial product, and like a loan it is subject to the rules of the German Federal Financial Supervisory Authority (BaFin).

Leasing also offers as much flexibility as a loan. For example, companies can choose between different billing models. In addition to usage-based billing, there is also the option of aligning payments with the project stages, for example by lowering rates during the rollout.

Rental models are quick and can be delivered with a minimum of effort, but the latest leasing models can now virtually match these advantages. Leasing allows companies to design their own IT solutions, with customized service catalogs and financial engineering options. But the critical point is that customers are able to choose between the two options.  This requires providers that can offer both, that are familiar with the legal frameworks within which international branches operate, and that are likely to still be operating in the future. Customers are entitled to demand this level of investment security, regardless of whether they lease or rent.