In our final segment of Understanding your copier lease, we will discuss a few final points of interest that need to be carefully reviewed prior to final approval. In Part 1 we went over the basic terms section which was relevant to term, payment and fees. In Part 2 (the most important part in my humble opinion) we reviewed the terms that could potentially cause you as the consumer the most pain. Now in Part 3 we’ll finish up with some of the remaining terms.
- Insurance – Just like your car, you will be required to carry insurance on your copier. No, not for the sake of running a red light and striking a telephone pole, but for a catastrophic loss. Remember, by the shear nature of a lease, you do not own the equipment and in most cases it needs to be returned at the conclusion of the term in working order. Therefore, in the event of fire, flood, or some other natural disaster, you will be required to prove to the leasing company that your business is covered for such a loss. There are really two ways to achieve this. First, you could allow the leasing company to charge you an additional fee to add this coverage. The second option would be since you more than likely have some sort of business coverage you simply add it to your existing policy. This is achieved by a simple call to your agent and they should be able to provide the leasing company with the proper documentation. My preference is the second option, typically the leasing company will charge a premium for their coverage. Either way you’ll need to take care of this soon after the lease inception.
- Ownership/Taxes – This is the section of the terms that basically state that you own nothing and it is your responsibility to contact the leasing company if ANYTHING changes. It’s important to follow this guidelines, for if there is a change that they are not notified about, they can force you to take ownership by paying the remaining payments and any residual value. The other part to the section involves the payment of taxes. This is not for sales tax! Some states require that a property tax be paid on all durable equipment, if you live in a state that this is true, be prepared to pay!
- Default – I almost skipped over this one because it is so obvious, then I remembered that there is a part to this that should be explained. IF you default on most copier leases (non-payment) there is a clause that basically states that they will hold you responsible for the remaining payments on an accelerated schedule plus the residual value. Now you could make the argument that if I can’t make my monthly payments how am I supposed to accelerate them plus pay the residual? I’m pretty certain the leasing company understands this, but know they will litigate this with every intent to make you pay everything.
- Assignment – Copier leases make it clear that whoever signs the lease will be responsible for the lease until the conclusion and you may not absolve yourself from the responsibility by attempting to pass the lease onto another party. The big question I get about this is “What if I sell my company”? Yes, even if you sell your company the letter of the law states you are still responsible. Now, there have been plenty of examples of a company selling notifying the leasing company and requesting a transfer of ownership. I will say my experience has been that if the new company is credit worthy and a cross corporate guaranty is in place, this is never an issue.
In conclusion and the last bit of information I’ll leave you with is that you need to understand that most (if not all) copier vendors use a 3rd party leasing service. What does this mean? No dealer is going to finance the equipment and sell it to you. We all use reputable leasing partners! Understanding this means that if at any point during the lease something goes awry (i.e. the copier dealer goes out of business, or you are not happy with the service) there is NO recourse through the leasing company. Choose wisely when selecting your vendor, the last thing you want to have is a payment with no one to support you. In my 30 + years of providing exceptional customer service, I have unfortunately been witness to many horror stories.
If you take your time, do your due diligence and select wisely you will do just fine! Any deal that sounds too good to be true probably is and I’d caution you to pay extra special attention to the terms.
I hope you have gained some knowledge and are now able to properly negotiate your next copier lease. I am always available, so feel free to contact me, advise is always free.