School Considerations for Entering a Lease Facility for Information and Communication Technology (ICT) Products

The below is designed to be a useful guide to help Schools identify whether Leasing is the best option for their School. You should speak with the Lessor of the Leasing facility for answers to any specific questions you may have regarding lease arrangements for your School.

Sourcing of new equipment from the Department’s preferred suppliers, has cost saving benefits to Schools. As the purchase price will impact on the lease costs, Schools should ensure that wherever possible, the Department’s suppliers are used.

Before entering any Lease facility, the School should give consideration to the reasons the School Council wishes to utilise lease finance.

Some principal considerations surroundingleasing of equipment should be:

  • If the School has the cash to pay for the equipment, this should be considered, and favoured, as there is a cost to the School in using the lease finance.
  • The Lessor will require the equipment to be returned at the end of the lease term, the costs associated with the School not returning the equipment can be extensive. The lease facility provides flexibility in extending lease terms, either fixed term or casual, providing discounted rental.
  • If managed correctly, the facility can deliver savings to the School. By example: replacing old equipment at the end of the lease term, returning the old equipment to the Lessor and leasing new equipment, will ensure optimum cost effectiveness to the School and access to the latest ICT equipment. New equipment lease costs should be similar to the old equipment lease costs.
  • Consideration should also be given to the condition of the equipment at the end of the lease term, as damaged equipment may incur penalties and result in additional costs for Schools. Fair Wear and Tear is acceptable, however damage beyond this may incur penalties. One example is the authenticity stickers attached to the equipment for software, usually affixed on the bottom of notebooks. Removal may incur a cost.
  • Where possible, the School should select a lease term that matches the warranty period of the equipment. Therefore the lease will expire at the end of equipment’s warranty period and the equipment can be returned to the Lessor. The School then has the option to either take out a new lease or purchase new Equipment.
  • One of the benefits of leasing new equipment and returning old equipment means the School saves on potential costs such as maintaining old equipment, additional lease costs and/or purchase costs.
  • The Department’s Preferred Lessor’s lease facility contains flexible options for rental payments and the School should speak to Capital Finance to determine the best solution to meet the Schools budget requirements.
  • The School is responsible for insuring the equipment, however the Lessor has an insurance option for the School to access and the School should speak to the Lessor about insurance options available.
  • When adding upgrades to equipment which is leased, Schools should also lease the upgrade costs for the remainder of the lease term of the existing leased equipment.This ensures that the upgrade and the existing equipment leases expire on the same date. All the equipment can then be returned to the Lessor without financial penalty. Importantly, this practice means the Lessor’s equipment contains all leased items andthat there are no other add-ons to the equipment, which are owned outright by the School and therefore would require removal prior to the return of the equipment.

General Leasing – Reference GuideNovember 2009