Equipment Leasing Update

The Equipment Leasing & Finance Association’s (ELFA) Monthly Leasing and Finance Index reported that new business volume of declined by 35.1% as compared to same period in 2008.

Other data:- receivable over 30 days increased by 18.2%
- charge-offs increased by 56.1%
- credit approvals now at 65.5% as compared with 73.3% last year
- 47% of leasing companies reported decrease in transactions


-=Good Selling=-

10 Tips on How to Return a Leased Copy Machine!

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:

1) Read the lease and be familiar with the return clause, Make sure you notify with in the parameters of the lease contract.

2) 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.
3) Send all correspondence via certified mail oR Fedex, where you will get a signature that they received your letter.

4) Make sure that the system is in good condition, make sure the system makes a clean copy/print and make sure all of the accessories are working (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 go here for rest of article

Art Post

Eight Top Points to Lease or Buy a New MFP Copy Machine

Don't remember where I found this, I did not write it. However it is good information if you are thinking about leasing or buying a new copier.

Flexibility Of Structure - deferred rental payments, seasonal rental payments, balloon payments, quarterly rental payments, unequal periodic rental payments, periodic rental payments that begin low and increase throughout the lease term, and periodic rental payments which begin high and decrease throughout the lease term

Small Initial Cash Outlay - equipment leases generally do not require a down payment as is the case with most loans. The cash which is required at inception of an equipment lease is generally applied to periodic rental payments.

Rent Expense - provided the lease is structured properly you may deduct the entire rental payment as a current operating expense for financial reporting and for income tax purposes.

Warranty Pass Through - although the lessor is the owner of the asset you have the full benefit of all manufacturer’s and seller’s warranties and guaranties.

Expanded Credit Availability - provided the lease is structured properly, the ‘lease debt’ will not be listed as a liability on your financial statements and consequently may allow you to preserve your borrowing availability with your bank and other creditors. This will also result in improved debt-to-equity and earnings-to-fixed assets ratios.

Avoidance Of Financial Restrictions - many loan agreements and credit line agreements significantly restrict additional borrowing or financing. In some instances, a borrower must obtain the permission of an existing lender to do business with another. Equipment leasing, as a rule, does not have these types of restrictions.

Clarity Of Specific Uniform Commercial Code Filings - many banks and commercial finance companies that finance capital equipment acquisitions will file an "all encompassing" financing statement with the Secretary of State in the state where the asset is located and in the state where the business is registered. Generally, these filings which are part of the Public Record are very broad and may convey to the bank or other commercial lender an "interest" in any and all of the other assets of the business. Leasing companies also file financing statements with the same agencies, however, these statements are generally very specific with regard to the asset being financed and are done for information purposes only.

Simplified Credit Process - an equipment lease is generally easier to obtain than an equipment loan. It’s not uncommon for leasing companies to provide up to $75,000 in financing with only an application. Some leasing companies will go as high as $150,000 on the same basis. Most banks and commercial lenders require a complete financial package consisting of several years financial reports and tax returns on the business and the principals.

You can find more information here: Multifunctional Copier Network

Copy Machine Lease or Purchase?

Over the years, I've had many customers ask the age old question. Should I lease or purchase this copier?

I've been in the business almost 30 years and for those 30 years at the end of 36, 48 or 60 month lease you have been able to lease a new machine with more features and the same speed for less than what you leased the system for.

Yes, interest is charged on the lease.

However there are many things to consider when leasing. One, you preserve you capital, meaning you do not have to lay out $10,000 for a new system. Two, the "Time Value of Money". Three you can write off the entire amount of a "Fair Market Value" lease within the term. Four, basically the system are worthless after 48 & 60 months, new technology in the industry comes along every eighteen months or so.

Consider this scenario, today I spend $20,000 for a new copier system, in three years the system is shot, either due to not working well, or over use. Purchasing another system means spending another $20,000, so in three years you've laid out $40,000. If you would have leased the system for three years, you would no initial out lay of cash and could turn in the system and release another. Even if you lease leased for $20,000 for 60 months, payments would have been $390. Thus, after 36 months you would have 24 payments of $390 ($9,360) left. Here you can do a few things, negotiate with dealer to pick up a few payments to upgrade with them, or roll the balance into a new lease. Most dealers will pick up some of the remaining balance, lets say 20% ($1,872), your balance in the old lease is now $7,488, the cost of the new machine is again $20,000 ($390 for 60 months), and the balance on the old lease is $7,488 ($146.01), your new lease would be for $536.01. Your out of pocket for 36 months would have been ($14,040 initial term & one new payment at $536.01) $14,576.01.

Talk to your account, see what they think is right for you.

The only way I would purchase a system is at the end of the the year and I need the right off, or I am a very low volume user and believe the system will last ten years.

Hope this helps!!!

Return Leased Copiers

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:

1. Read the lease and be familiar with the return clause, Make sure you notify with in the parameters of the lease contract.


2. 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.


3. 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).


4. 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.


5. 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.


6. Make sure all shipments are insured.


7. 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.


8. 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.


9. 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.


10. 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).


11. 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.