Over the years, I would say that ninety percent of my clients leased their copiers with an option to buy the copier at the end of the term. Most of these leases had a buy out option for FMV (Fair Market Value). The general idea of an FMV lease is that the customer has no intention of ever owning the equipment and they will return it at the end of the lease.
Most leasing companies have been and still are very aggressive with FMV rates (interest), however most will have clauses in the leases that you must notify them in writing before the end of the term. All of the leasing companies have a "Window" clause, meaning you only have "x" amount of time when you can notify them, some are not more than 90 days prior to the end of the term and others are not more than 180 days and not less than 90 days. Make sure you read the lease!!!
Here's a few helpful tips for you:
- Read the lease and be familiar with the return clause, Make sure you notify with in the parameters of the lease contract.
- Set a reminder in MS Outlook or another contact management program to remind you to submit your LOI (Letter of Intent), state whether you will return or you wish to purchase.
Send all correspondence via certified mail of Fedex, where you will get a signature that they received your letter. - Make sure that the system is in good condition, good quality copiers and that the machine passes a piece of paper (some leases now have clauses that they will charge you for parts and labor if the system was not returned in good working order).
- Most leasing companies have preferred shipping companies that will pick up, pack, return and insure the product, make sure you call the leasing company for a list of preferred shippers.
- When calling the leasing company for a pay off figure, never ask for a buy-out, ask what the remaining stream of payments are. When asking for a buyout you are telling them that you want to buy the system.
- Make sure all shipments are insured.
- Take a video of the copier making copies, also the model number and serial number, hence you proof that it left your facility in good working order.
- Whenever calling them always get the name of the person you are speaking with, log date and time of call and if you have a verbal agreement make them send you a fax, email or letter stating their position.
- Be wary when upgrading and the new copier company states they will return it for you, while most companies will do this as a service and most are very good at it, there are some who will drop the ball and not return the system on time. If they don't return on time it's your headache not theirs. Have a separate contract with the new vendor that covers everything above.
- Never have the system moved from your location until you have notified the leasing company or they have sent you a RAL (Return Authorization Letter).
- I've written this for the end user, however dealers and sales people can benefit from some of this especially videoing the product before it is shipped and having a separate contract for return.
