If you’ve ever negotiated a printer or copier, you already know how difficult it can be to make sense of an equipment lease agreement. Combine that with the fact that these agreements are difficult to break, and you’ve got the perfect recipe for a contract you never wanted and can’t get out of.
This guide will walk you through several of the most notorious contract stipulations to help ensure that you know what you’re getting into before you sign
- Annual Rate Increases Most copier contracts can be broken down into two parts: equipment and service. Depending on the dealer, a contract may include annual rate hikes on both parts. Ten percent is a standard mostly due to increased maintenance as the machines ages but why should you pay more for older equipment? You shouldn’t. Especially when you consider that rate increases compound year over year. Let’s break that down. Equipment rate hikes are left to the discretion of your dealer. Pick a dealer that won’t raise the rate on your equipment.
- Auto Renewal Lease agreements can include an auto-renewal clause that re-ups your contract for an additional year at the end of the initial term. The renewed contract can be subject to the same rate increases mentioned above. For example if your 5th year payment was $120/month, now it’s $160/month. You can end up paying alot more than the initial agreement. To avoid this be aware of your obligations! Protect yourself and pick a dealer who auto-renews month by month from the end of contract.
- Hidden Fees & Charges What happens if you decide you need an additional printer or copier 2 years into your agreement? Should you sign a new lease or wrap your new equipment into an existing lease? Your decision in this moment can have serious implications on your financial commitment. Be careful. Some dealers may try to combine your new and old equipment under a new 5 year term. The service portion of your existing lease will be moved to your new lease stipulating everything must be paid back in five years. Its just a new lease with an unmovable service contract!
- End of Contract Obligations Equipment leases are binding financial agreements. In order to get out of a contract you generally need to pay the balance of your future payments. This is called a buyout to return, and as you might expect, it’s the process required of the lessee to end a contract early. Make sure you are comfortable with your buyout options before you sign. Don’t let the dealer charge additional fees or force you to purchase your equipment in order to cancel the contract.
- Know what you are signing before you sign! FXBC Mid North Coast is committed to transparency throughout the sales process. Pick a dealer that wont sell you a landmine lease. Contact our solutions consultant today!