For many companies, computer leasing is an important strategy. By leasing computers, you can conserve capital and reduce startup costs. Unlike outright computer purchases, computer leasing requires only a small initial outlay of funds. Payments are then made on a monthly basis, over a pre-specified term.

Of course, there are both pros and cons to computer leasing. A good bit of the criteria is determined by the type and cost of the computers in question. While you might not want to bother with leasing inexpensive low-end computers (that could just as easily be purchased outright), it’s at the high-end where leasing can make the most sense.

If you need to keep your computers up-to-date and on the cutting edge–packed with the fastest processors and hard drives, and crammed with lots of RAM, along with the latest and greatest video cards–computer leasing can be quite attractive. With a two-year lease, you can stay on top of the technology curve. After the lease term is up, you can simply ship the old box back and pick up a new one.

Overall cost is perhaps the biggest downside to computer leasing. From a bottom line perspective, you’ll often spend more on lease payments then you will on outright purchase. Of course, not everyone has all the cash lying around to plunk down on new computers. Hence, that new computer purchase often winds up on a credit card–where the finance costs can rival that of leasing.

A good many computer leases allow you to purchase the computer at the end of the term for a pre-determined fee. There are different types of leases, with different buy-out structures and tax implications. If you’re considering leasing with the possibility of buying the computer at the end of the term, be sure to check with your accountant to fully understand the implications.

You’ll also do well to check the insurance requirements. Some leasing companies will require you to maintain insurance on a leased computer, while others may not. (My first computer lease did not stipulate that I needed to cover the computer, while the following lease did.) Computer insurance can add a significant amount to your monthly lease payment. Be sure to check this before you sign on the proverbial dotted line.