Equipment Rental or Lease
Purpose
This document establishes requirements for the rental or lease of equipment to ensure compliance with State of North Carolina procurement rules and University financial standards.
Guidelines
While there is no specific prohibition against renting or leasing equipment, the State of North Carolina and the University generally regard purchasing equipment as more economical.
Rental or lease arrangements may be appropriate in certain circumstances, including:
- High acquisition cost – When the initial purchase price of equipment is significant, rental may be a viable option.
- Rapid technology changes – When equipment is subject to frequent updates or technological advances, making ownership less practical.
- Short-term evaluation needs – When equipment must be evaluated prior to long-term investment.
Rental vs. Lease Agreements
- A lease agreement typically has formal terms and conditions, is for a fixed period, and cannot be canceled without penalty.
- A rental agreement is less formal, indefinite in length, and terminable with notice.
- Neither agreement should include provisions for ownership.
Lease/Purchase Agreements
- A lease/purchase (installment buying) agreement is generally structured with the intent of eventual ownership.
- Such agreements often run for one to three years and carry significant cancellation penalties.
- These arrangements require additional lead time and typically involve negotiation with a third-party financial institution.
- The University is prohibited by law from incurring debt financing.
Submission Requirements
Departments requesting equipment rental, lease, or lease/purchase arrangements must submit:
- A requisition to Procurement Services
- A memorandum justifying the rationale for leasing versus purchasing
- A copy of the proposed agreement
All lease and rental agreements must be reviewed and approved by Procurement Services prior to execution.
Related Statutes and Regulations
