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Office Copier Lease: What Are You Agreeing To?

November 14th, 2019 | 5 min. read

By David Riener

READ TIME: 5 MINS.

“What do I have to do to get out of this lease?” When you sign a copier lease, what are you really agreeing to? This question (or a version of it) inevitably gets asked by purchasing decision-makers who have signed a Fair Market Value (FMV) Lease, otherwise known as an Operating lease. 

The reasons “why” someone would want to get out of a lease are numerous; poor service, lease rate increase, desire to upgrade to new technology, can’t afford the payments, a savvy salesperson who has convinced a client to consider making a change—the list is endless.

Before we get too far into the weeds, the goal of this article is to help businesses understand when they sign an FMV lease what they are actually signing and what remedies they may (or may not) have if they desire to end the lease prior to its scheduled termination date.

 

Your Fair Market Value Lease: Agreements, Conditions, and Terminations

 

1. Read Your Entire Office Copier Lease. And Then, Read It Again. 

Before you sign anything, it’s vital you read everything you are being asked to sign. And yes, we mean everything. We know this may sound intuitive, but too many businesses have unfortunately learned that lesson the hard way.

If there is terminology that is confusing within the lease, ask the representative you are working with for clarification or further explanation. If they are not able to adequately answer your questions, get them to provide you a contact who can (preferably someone from the leasing company.) 

Also, if you’re on the fence on whether to purchase or lease your next office copier machine, read our article, Should I Lease My Next Office Copy Machine For My Business? 

 

2. Understand Standard Office Copier Lease Language

Despite what a representative might say, the terms and conditions on the lease are what you agree to. Take a look below at the standard lease enforceability language:

LEASE TERMS AND CONDITIONS:  You agree that this agreement is a net agreement that you cannot terminate or cancel, you have an unconditional obligation to make all payments due under this agreement, and you cannot withhold, setoff or reduce such payments for any reason. 

AGREEMENT: Your monthly base payment obligation is unconditional and is not subject to any reduction, set-off, defense, or counterclaim for any reason whatsoever.

The terminology speaks for itself. When you sign an FMV/Operating lease, you are on the hook for the entire term of the lease.

To learn some best practices on finding a leasing company near you, read our article, Who’s the Best Copier Leasing Companies That You Can Trust? 

  

3. Ending Your Fair Market Value Lease Term Early

So what does it mean if you want to terminate your lease early? Well, first, see above. However, if you must terminate your lease even if the term is not up, the only way to completely “get out of the lease” is to pay the remaining terms left on the lease. This doesn’t mean just the payments, either.

By the way, you are also on the hook for service (if the service portion of the agreement is added to the lease payment), sales taxes, property taxes, return fees, and any late payment penalties owed. 

interactive-copier-and-printer-buying-guide

4. Copier Lease Buy-Out

Have you ever heard a salesperson say, “We can buy you out of your lease” or “We have marketing dollars to assign towards buying you out of your lease.” Or, really, anything that gives the impression that they have some magical ability to help you get out of your lease? 

When the current vendor you're working with buys out a competitive lease, it doesn't magically go away. However, there are four ways a great office technology company can mitigate or reduce the loss to you. They can do so by: 

  1. Reducing the cost of their goods to you to offset the buy-out. What's a buy-out?  A buy-out refers to an agreement where the lease of your existing equipment is given up for the remainder of it's contractural term. This buy-out agreement voids the existing lease while also providing you with a new lease agreement through your new vendor.  

  2. Using marketing dollars, or Marketing Development Funds (MDF) provided by a manufacturer or rebate passed on directly to you. MDFs are used by vendors in an indirect sales channel to help their partners pay for the necessary tools or equipment to sell the vendors’ products or services. 

  3. Providing some type of incentive, based upon the total dollar spent. Whatever amount is currently left on the old contract is reduced by a certain percentage that offsets your lease, based on how much the new equipment or services costs.

  4. Allowing your current (older) lease to rollover into the new lease they're offering for their products and services. The existing equipment can transfer over to the new lease provided by the new vendor you're choosing to partner with. 

5. Why Sign An Agreement Like This?  

Most people want to know the time, not understand how a clock works. Most business people are more concerned with the monthly payment, not how much is being financed. Sound familiar? 

Why? FMV/Operating leases are typically accounted for as expenses. Therefore, a decrease in monthly payment means a decrease in monthly expenses, which is a win, even though they may have refinanced thousands of dollars of debt.  

The reality is that people do this with cars and cell phones all the time, making this type of behavior more of a “normal thing.”

Technology changes rapidly, and both large and small businesses would rather lease technology with little residual value, saving the upfront cost of coming up with the money to purchase the equipment.

 

“Entrepreneur” also published an article on buying and leasing a copier, you might find helpful to read, Should You Lease or Buy Your Tech Equipment?

Even though copy machine leasing is a dense topic, my hope is that I informed you of some new ways you can better look at the terms and conditions of your office equipment. Or, if you’re in the market for a new office black and white or color copier, you now have a quick guide to turn to as you explore the different providers in your area. 

If you’d like to learn more about office technology and solutions, be sure to check out our Ultimate Office Copier Resources Page

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Our goal at AIS is to provide you with useful and relevant information on office technology solutions so that your business can continue on its path of growth and success. We are here to support the needs of your organization, employees, and customers. If you’d like more information on copier leasing or any of the products and services we offer, reach out to us here. Also, visit us on YouTube, The Copier Channel. We’re here to give you peace of mind to help you win more business.

 

 

David Riener

A Texas Longhorn with over 20 years of experience, David is a well-known figure in the business technology industry. He has a proven record of facilitating long-term business relationships with both customers and industry leaders. His experience and attitude not only encourage sales growth but also encourages company culture and achieving long-term business goals.