Even with new technology entering the marketplace regularly, today a majority of businesses still need copier machines. So chances are, at some point you’ll have to make a decision about a copier. When you do so, you’ll need to consider whether to lease or buy the machine. There can be many benefits to leasing over purchasing. Some of the benefits of leasing a copier are:
- Very low upfront cost
- Pay a manageable monthly rate
- Solve short-term needs
- Option to include maintenance
- Easy to replace and upgrade to a newer unit
Have you already considered the pros and cons to leasing vs. buying and decided that leasing is the best option for you? Great – now it’s time to prepare to have an efficient conversation with your office equipment supplier. It can be easy to overlook important items when going through your contract and wind up making a big mistake! We have put together a list of common mistakes to watch out for before signing that contract:
1. Don’t overpay
Copier salespeople will often speak about “monthly rate” – or how much you are willing to pay per month – when going through a lease agreement with you. Basically, they want to know what you can afford per month and shape the agreement accordingly. But this can distract you from realizing that the actual value of the copier is way overpriced!
It’s helpful to understand that copier sales are a lot like car sales – you are allowed to negotiate a price. Instead of discussing monthly payments, consider the price of the copier as if you were planning to purchase it. Once you have negotiated the purchase price of the copier, the salesperson can then calculate your monthly lease payment based on the negotiated price. You can potentially save a lot of money this way!
2. Don’t gloss over the “service agreement”
It’s common with copier deals to bundle a service contract into your lease. However, many businesses looking to lease don’t realize that they can opt out of adding service and maintenance. You get to make the final decision whether you’d rather include service and maintenance for convenience, or handle it externally on your own. Be careful! If your lease is tied to a service contract but you are unsatisfied with the service you are getting, you will be stuck paying for it.
Also, remember that many copiers on the market today are more reliable than they were in the past. This means that the copier you choose to lease may not need frequent maintenance. It may be cheaper to pay for repairs on an as-needed basis than to commit yourself to a service contract. Ultimately, it’s up to you – so remember, you don’t have to include service if you don’t want to!
3. Don’t sign a long contract
When discussing your lease agreement, you will have different contract lengths to choose from. Your copier dealer may suggest longer terms. But keep in mind that most buyers should not sign a contract that is longer than 36 months. With a few exceptions, 36 months is the maximum commitment you should make on a leased copier. There are a couple of reasons for this:
- Generally, it is no more cost-effective to sign a longer lease compared to signing a shorter lease.
- If anything goes wrong with your copier and you are on a 4-5 year lease, you are locked in with the machine.
- Technology for copiers is constantly improving. A shorter term lease makes it easier to upgrade, but a longer contract may delay a more modern copier for years.
The best way to handle this decision is to ask your supplier about their various contract length options. Compare and contrast the differences in cost and convenience for the same machine in terms of each length. Be careful of being talked into a longer contract, as you may decide you want to upgrade after 2-3 years!
4. Don’t ignore the expiration date
Make sure you read and understand your leasing contract’s duration and financial terms. In some instances, the contract may not require the finance company to notify you when the lease has expired. If you overlook the expiration date and keep making payments, your obligations may extend beyond the original term of the lease! This type of lease is commonly called an “Evergreen Clause,” which allows the leasing company to make additional charges beyond the original cost of the equipment. Take ownership of your lease and keep track of your payments. And most importantly – know when your lease expires.
5. Don’t forget to plan for when your lease ends
When your lease is coming to an end, you will have different options. It may not occur to you when signing the agreement what you may want to do when it ends. However, if you’re aware of your post-lease options, you can set up your current lease accordingly. This way, you can make your life easier and save money down the road. The options at the end of your lease are:
Purchase Copier For $1, with Higher Monthly Payments
At the end of your lease, many copier dealers will allow you to purchase the copier for $1. With this method, your lease payments will build the highest equity toward the copier. (Note: this is why you negotiated a lower cost for the copier). This option will result in higher monthly payments. However, you will save money on the purchase down the road. Select this option if you believe you will want to keep the copier after the lease expires.
Purchase Copier For 10% Of Value, with Lower Monthly Payments
With this option, you will be able to purchase the machine for a fee of 10% of the original value. With this option, your monthly payments will be lower than if you are planning to buy for $1 after the lease ends. This option is best if you are not yet sure if you will want to keep the copier when the lease expires. You’ll still be getting a great deal!
Purchase Copier For “Fair Market Value”, with the Lowest Monthly Payments
If you know you will not keep the copier after the lease expires, choose this option. This option will give you the lowest available monthly payments. At the end of the lease, you will still have the option to purchase the copier at fair market value, which is usually a bit more than 10% of the original value. If you choose this option and later decide you want to keep the copier, you still may be able to negotiate a lower price. Remember, buying a copier is like buying a car. You can always negotiate.
Ready to make a decision?
Now that you know the mistakes to avoid when leasing a copier and are ready to lease, we can help you get started on finding the right lease agreement for you. We’ll connect you with up to 5 trusted and qualified copier suppliers who will give you free price quotes and answer any questions you may have. Connect with us today – we’re excited to help!