Part 2 of our series of making sense of your copier lease
We will now dig into the actual terms and conditions of a typical copier lease and what to pay special attention to before signing this document.
Lease Payments and Term Section:
There are a few things to note and pay special attention to here. Looking past the we “bill” you “pay” aspect of this section, I’d like you to scan for the words “Interim Rent” and help you understand what this could possibly mean. Let’s use the example that you took delivery of your new copier on the 15th of any given month and let’s say it is a 36 month lease. If the leasing company typically invoices their leases on the last day of the month, the “interim rent” could mean that you are responsible for the 15 days of rent in the current month plus the next month payment. Is this a big deal? Let’s look at the math for this example: If your monthly payment was $100 x 36 months = $3600. If the leasing company charges you $50 for the interim rent, that makes the entire deal worth $3650! That $50 was pure profit! Now I realize that no one is going to get rich over $50, but if your payment was in the thousands of dollars (not impossible), you could see that interim rent helping the leasing company’s profit margin, no? This is simply eradicated by having the leasing company invoice the first full payment on the date of install.
The other suspect term: “We may adjust the lease payment…” <<< let’s cross this one out! It has been explained to me the reason for this verbiage on a lease is by some outside chance you decide to “add” an option after the lease has been approved (up to that percentage), a new approval won’t need to be completed. IF you need to add something, take the time to get a new approval and (again) cross out this line. If your sales paperwork says $xxx.xx and it contains all of the equipment and options you require, there should be no reason to change the price after the fact. I have personally witnessed this condition blatantly abused by a small percentage of unscrupulous copier vendors.
Equipment Delivery, Acceptance and Repair section:
Nothing overly complicated about this section, however a few points of enlightenment. You may not move the equipment from its initial location without formally notifying the leasing company. Why? They want to know where the equipment is during the course of the lease. If you fail to pay or default (we’ll talk more about non-payment and default later in this series) on the lease they want to have the option of repossessing the equipment. Does this mean you can’t relocate your business? Of course not! If the need should arise a simple letter (send it certified mail) to the leasing company will suffice as notice. I’ve never been witness to an instance of a legitimate move that the leasing company hasn’t approved. The other added benefit to notifying, especially if it’s long distance, is the leasing company can often suggest a reputable servicing vendor. They should have many in their portfolio.
Which brings to light the final point in this section. Since the leasing company is not responsible for the maintenance and repair of this equipment, they demand that you as the customer preform the necessary service intervals to keep the copier in good working order. This is important since the machine must be returned at the conclusion of the lease term operational, less the wear and tear of course.
Lease Expiration and Renewals section:If there was ever a point where you might want to stop reading, get a cup of coffee (or the beverage of your choice), take a nap or maybe just a break to insure your undivided attention, this would be the time!
Ready? OK, so let’s begin…
All copier leases include the dreaded expiration and renewal clause section. Probably the most important section to make certain you understand completely! The funny thing about this section is that it is not complicated, but the day you are signing this document your last concern is 36, 48, or 60 months down the road. Don’t do it, be diligent! I tell my customers to take a look at the first sentence: “Unless you notify us at least xx days prior…” and go to their calendars, advance to the number of years of the lease, subtract xx + 30 days and place a HUGE X on that day. it should equate to at lease 4-5 months prior to the expiration of the lease. What should you do on that day? Submit to the leasing company a Letter of Intent! Without that letter being submitted and within the leasing company’s guidelines, your lease will automatically renew. Now, most copier vendors will tell you not to worry, they can get you “out” of the renewal. They can! ONLY if you renew with them. Yep, kinda stinks, especially if you had a bad experience with them. I can’t begin to tell you how many perspective clients I meet that either have no idea about this condition or better yet have been told “not to worry about it”. IT IS VERY IMPORTANT <<<yes, I’m yelling.
The next important part to understand about this section is that you are ultimately responsible for the safe return of the equipment to the leasing companies desired location. This comes as a shock to many people, their assumption is that a truck will roll up and take it away! Nope, not the way it works. Most reputable copier vendors include this as a service along with a renewal or new deal. I know I do…
Restocking fees! Yes, some leases do include a restocking fee of up to one payment to return the equipment if the purchase option is not exercised. Be careful with this, if you have a substantial payment this could add up! Know what you are getting into before the “end” comes. Some leasing companies will allow you to strike this, some won’t. You could always ask your vendor to find you financing that is void of this condition.
That’s enough for now, I’ve given you a lot to absorb. We’ll continue soon and get through the balance of these terms and conditions and until then…