Lease, Buy, or
Finance?
Three ways to acquire GPU infrastructure. Each has tradeoffs around cash flow, ownership, flexibility, and accounting treatment. Here's how to decide.
"Should I lease or buy?" is the wrong question.
The real question is: what matters most for your organization right now?
There's no universally right answer. The best choice depends on your financial situation, growth plans, technology strategy, and accounting preferences. This guide breaks down the options so you can make an informed decision—or have a better conversation with your CFO and accountant.
Compare Your Options
A clear view of how each acquisition method stacks up across key factors.
| Factor | Cash Purchase | Equipment Financing | Operating Lease |
|---|---|---|---|
| Upfront Cost | 100% | 0-20% down | 0-10% |
| Monthly Payment | $0 | Fixed | Fixed |
| Total Cost | Lowest | ~8-15% higher | ~15-30% higher |
| Ownership | Immediate | At term end | Never* |
| Balance Sheet | Asset + depreciation | Asset + liability | Off-balance sheet* |
| Cash Flow Impact | Major (Year 1) | Spread | Spread |
| Technology Risk | You own obsolete | You own obsolete | Return at end |
| Flexibility | Sell anytime | Payoff possible | Locked to term |
| Tax Treatment | Depreciation | Depreciation + interest | Operating expense* |
*Accounting treatment depends on lease structure and ASC 842 considerations. Consult your accountant for guidance specific to your situation.
When to Buy with Cash
Cash purchase makes sense when you can afford it and plan to use the equipment long-term.
You have excess capital
Cash sitting idle earns minimal return. Productive GPU assets can generate revenue or accelerate R&D—a better ROI than a savings account.
You want lowest total cost
No interest expense, no lease premiums. Cash purchase saves 10-20% compared to financing over the equipment's lifetime.
High confidence in long-term use
If you're certain you'll need this hardware for 5+ years, owning it outright eliminates ongoing payment obligations.
Balance sheet benefits from assets
Building an asset base can strengthen your balance sheet for future funding rounds or acquisition positioning.
When to Finance (Loan)
Equipment financing gives you ownership benefits while preserving working capital.
Want ownership but preserve cash
Build assets without draining your cash reserves. Keep capital available for operations, hiring, or unexpected opportunities.
Can benefit from depreciation
Section 179 expensing and bonus depreciation can provide significant tax benefits. Financed equipment qualifies just like cash purchases.
Want predictable payments
Fixed monthly payments simplify budgeting and cash flow forecasting. No surprises over the financing term.
Equipment will hold value
You retain the option to sell, repurpose, or trade in equipment. Ownership preserves your ability to monetize the asset later.
When to Lease (Operating Lease)
Operating leases offer flexibility and potential balance sheet benefits for the right situation.
Preserve balance sheet capacity
Operating leases may qualify for off-balance sheet treatment, preserving debt capacity for other strategic needs.
Technology obsolescence concern
GPU technology evolves rapidly. Return equipment at term end and upgrade to newer hardware without owning depreciated assets.
Want operating expense treatment
Lease payments may be treated as operating expenses rather than capital expenditures, aligning with certain budget structures.
Uncertain long-term needs
If you're not sure you'll need this capacity in 3-5 years, leasing gives you flexibility at term end without residual value risk.
Find Your Path
Answer a few questions to identify which acquisition method might fit your situation.
Accounting Considerations
Each acquisition method has different implications for your financial statements and tax returns.
Cash Purchase
- Capitalize asset on balance sheet
- Depreciate over 5 years (MACRS)
- May qualify for Section 179 expensing
- May qualify for bonus depreciation
Equipment Financing
- Asset appears on balance sheet
- Loan liability on balance sheet
- Depreciation similar to purchase
- Interest expense may be deductible
Operating Lease
- May be off-balance sheet
- Payments as operating expense
- No depreciation to manage
- ASC 842 lease accounting applies
Scenarios You Might Recognize
See how different organization types might approach the lease vs. buy decision.
Funded Startup
Established Enterprise
Growing MSP/Colo Provider
Frequently Asked Questions
Can I switch from leasing to owning?
Yes. Most equipment leases include buyout options at term end. You can typically purchase the equipment at fair market value or a predetermined residual amount. Equipment financing loans result in ownership automatically once the loan is paid off.
What happens to leased equipment at term end?
At the end of an operating lease, you typically have three options: return the equipment, extend the lease at a reduced rate, or purchase the equipment at fair market value. The specific options depend on your lease agreement terms.
Is leasing more expensive than buying?
Total cost of ownership is typically 15-30% higher with operating leases compared to cash purchase, and 8-15% higher with equipment financing. However, leasing preserves cash flow and may offer tax advantages through operating expense treatment. The right choice depends on your financial situation and priorities.
How does GPU depreciation actually work?
GPU hardware is typically depreciated over 5 years using MACRS (Modified Accelerated Cost Recovery System). Cash purchases and financed equipment may qualify for Section 179 immediate expensing or bonus depreciation, which can accelerate tax benefits. Consult your tax advisor for guidance specific to your situation.
Can I lease for a short term (12 months)?
Short-term leases (under 24 months) are less common for GPU hardware due to equipment costs and depreciation rates. Most operating leases run 24-60 months. For shorter-term needs, consider cloud GPU rental or SLYD's compute marketplace as alternatives to equipment leasing.
What if I need to exit a lease early?
Early termination of equipment leases typically involves buyout penalties calculated based on remaining payments. Some agreements allow early buyout at a predetermined schedule. Equipment financing loans can usually be paid off early, sometimes with prepayment fees. Review your specific agreement terms before signing.
Let's Find the Right Structure
Tell us about your situation. We'll help you understand which acquisition approach makes the most sense—and connect you with the right financing options.
