Lease vs. buying on credit
Same racks. A tenth of the cash on day one.
A loan buys the hardware and every risk that comes with it. A lease buys the years you will actually use it. One fleet, two routes, 36 months, in dirhams.
The example
- Fleet
- 16 × 2U GPU servers + 2 × 100G switches
- Purchase price
- AED 2,000,000
- Term
- 36 months
- Bank loan
- 25 % down payment, 9 % p.a.
- Lease
- AED 50,000 per month, residual stays with Iron Yield
Cash needed in month 1
LeaseAED 50,000
Loan purchaseAED 500,000
First monthly payment against a 25 % down payment. AED 450,000 stays in the business.
Paid over 36 months
LeaseAED 1,800,000
Loan purchaseAED 2,217,000
Loan: down payment plus 36 × AED 47,700. Lease: 36 × AED 50,000, delivery and data erasure included.
Net cost after the term
LeaseAED 1,800,000
Loan purchaseAED 1,717,000*
* Only if you sell the fleet yourself for AED 500,000 in month 36. Three-year-old GPU prices are not guaranteed, and the sale, wiping and shipping are your work.
Side by side
Where the routes part ways
| Lease with Iron Yield | Purchase with a bank loan | |
|---|---|---|
| Cash up front | First monthly payment | Usually 20–30 % down plus bank fees |
| Residual-value risk | Ours. You never sell used hardware. | Yours. The resale price in year three is unknown today. |
| Collateral | The hardware itself | Often extra security or personal guarantees |
| Time to a decision | Days — we know the hardware | Weeks — credit committee, covenants, paperwork |
| Newer generation | Swap at the end of the term, or mid-term with the refresh option | Run the old machines or sell them yourself, then buy again |
| End of term | Renew, buy at the agreed figure, or return | You own hardware you may no longer need |
| Logistics, erasure, disposal | Done by Iron Yield | Your cost and your responsibility |
| Invoices | One fixed payment, one invoice | Loan instalments plus vendor, freight and service invoices |
| Books and tax | Lease liability on the balance sheet; ownership and residual with the lessor. Payments usually deductible as an operating expense. | Asset and loan on the balance sheet; depreciation and interest deducted separately. Check with your adviser. |
For balance
When buying is still the right call
- You will run the same machines for six years or more and plan no refresh.
- Your cost of capital is below the implied rate of the lease and cash is not a constraint.
- You have a team that resells used hardware well.
- The hardware is custom or vendor-locked with no secondary market, so no lessor will price a residual.