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Schools inevitably want to provide their students with the best possible equipment in order to help them accomplish their expected grades as well as all the skills they require before leaving the education system. In order to do this, head teachers have the arduous task of finding high quality equipment – sports equipment, catering equipment, minibuses, computers and tablet devices – at the right price. Where schools don’t have the budget to buy school equipment outright, leasing is a useful solution. But it can be daunting if you’ve not used leasing before. That’s why it pays to have some education leasing tips to hand before you decide to lease school equipment for your students.
Here are our top dos and don’ts when it comes to leasing school equipment.
Do: Know financial regulations and current legislation.
Simply organising education finance does not guarantee that you are compliant with current regulations. Remember to question the lessor you’re working with to make sure that they are operating according to current guidelines.
Do: Investigate your education leasing options.
Ensure the lessor is fully aware of the type of lease you need to have as a school or college, and explore the option of funding school assets separately. Separating agreements for different assets may mean that you’re able to negotiate further and save money.
Do: Consider whole life costs.
Repairs and maintenance costs should always be factored into your budget. Factor in the entire working life of the asset in question – this will help you to more specifically factor in potential repair costs and also help you to plan ahead when the asset is coming to the end of its working life.
Do: Pay annually if possible.
Paying an annual lease payment in line with an annual budget allocation will mean lower interest costs and a significant overall saving.
Do: Leave sufficient time to replace your equipment when it’s at the end of its working life.
This will mean a less rushed process, where you can more carefully consider your leasing options going forward. Compare the price of extending your lease to organising a new one – you may find that the extra time taken to explore your options will benefit you in the long run.
Don’t: Sign a rolling contract that will inevitably lead to increased rates.
When it comes to renewing education lease agreements, it’s important to be wary of your current contract being rolled over because this may simply mean that the prior outstanding balance will be refinanced and increase the overall cost of the lease. Always ask for a better deal when it comes to the end of your contract – you may be able to renegotiate a new education finance deal that will suit your budget requirements.
Don’t: Forget to record your asset management processes.
If your school doesn’t yet have a documented asset management process, you may want to start recording your current processes and adjust them as and when you go through the process. This will make for a more streamlined system next time you come to lease school equipment.
Don’t: Renew the same education leasing contract again and again.
Firstly, it may not cater to your changing needs, and secondly, you may find that renewing the same lease again and again is not the best financial choice to make. Although extending your lease beyond your initial agreement may seem like the easiest option, it may come with additional costs that are part and parcel of, essentially, entering into a new agreement. The right solution for you is all about exploring your possibilities – compare the cost of extensions, renewals, or simply negotiating a brand new deal.
Don’t: Assume that your maintenance and repair costs are covered by a basic leasing contract.
Ensure that you pin down your options and the additional cost of maintenance and repairs before signing on the dotted line.
Don’t: Forget to factor in the risk of residual values.
By the very nature of leasing school equipment, a lessor will have to make a residual investment in the equipment that they will be leasing to you. At the end of the contract, they will try to recover the investment they made by either selling the equipment or extending the lease period. This does carry an element of risk, as the equipment may significantly depreciate in value and be sold at a much lower cost that what was originally paid for the item. Often the lessor will eliminate the risk at their end by stating in the contract that the lessee may have to compensate the lessor if the investment made cannot be recovered.
Make sure you discuss this in detail with your lessor, and maintain the equipment properly – as any damage caused to the equipment may mean that you reduce the value of the asset significantly.
Need further support with education leasing? Our team of asset finance experts are experienced in school finance and supporting schools with their diverse requirements. Contact Maxxia today for further information.
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