Dealers and lessors all claim to have great relationships with each other, but sometimes they may not see eye-to-eye on the credit-worthiness of a client. The client might not meet all of the lessor’s requirements, while the dealer knows the client well enough to trust their ability to meet the lease terms. When this happens, lessors have options to help the client get the needed financing.
The first is to simply go to another lessor. Most dealers partner with multiple lessors in the hope that one will be willing to fund the lease. If all turn down the lease, then the dealer will go to the lessor it feels will work with them. Lessors base their decisions on information such as credit scores and behavioral analytics that dealers might not have access to, but they are usually willing to work with both dealers and customers.
Michael D’Errico, CIT
“We’re always willing to get on the phone with the end user if that needs to be the case, just work through whatever details that they feel is the item. We do that from a price standpoint very well. We do that from a legal standpoint, regarding terms and conditions. Our vendor partners are comfortable with our team getting on the phone with their end user. That’s not done up front, that’s earned over time, that trust,” said Michael D’Errico, Office Imaging Commercial Leader at CIT.
Another option is syndication, noted Fred Carollo, vice president of originations, Office Products at EverBank Commercial Finance. In a syndication deal, EverBank would still invoice and service the transaction, so neither the client nor the dealer handles the syndication partner.
Fred Carollo, EverBank Commercial Finance
“We have other financial partners who will participate in a transaction with us,” he said. “We can work with the partner with one of our other finance partners that may have different policies, regulations or appetite for that specific credit.”
Because the market is good, lessors will negotiate some on rates, which Commonwealth Digital Office Solutions’ sales team does regularly. “The leasing companies are hungry, they’re competitive,” said Mike Sarelson, Commonwealth president and owner. “We only care about what’s the cheapest rate. That makes the machine less expensive for the customer, and we sell more product and can be more competitive.”
Sarelson said that a typically negotiated break on rates might mean the customer pays $45 less a month on a $50,000 order over 60 months, or $2,000 less for the life of the lease. “Every little bit helps,” he says, noting that the rate is just one piece of what helps a dealer close a sale. “Reputation, better service and warranties, and the way you do business are also important. The customer never knows what the rate is. They just know the monthly payment.”
Mike Sarelson, Commonwealth
A few types of business still have trouble securing credit for a lease. Smaller print shops with fewer than 10 employees, for example, are looking to acquire digital production print systems, but sometimes can’t get financing. “They are very good customers, but their credit is not that good. That’s where we get our turned-downs,” said Sarelson.
Canon Financial Services is a captive business unit of Canon that services lease accounts for businesses ranging from federal and state municipalities to global accounts, as well as small mom-and-pop businesses. Dominic Janney, vice president of sales and servicing for CFS, notes the company has seen an uptick in more challenging credits in the lower end, such as smaller print-for-pay businesses and franchises, as copy volumes decline.
“The market is also very price-competitive with the larger, more established businesses, where we are not only competing against other leasing competitors, but also the businesses’ bank lines and cash,” Janney said.
