Over the years I would say that 90 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 buyout 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. Also means lowest lease payments.
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 until you 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 are a few helpful tips for you:
1. Read the lease and be familiar with the return clause. Make sure you notify within 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) and 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 leasing company received your letter.
4. Make sure that the system is in good condition and produces a good copy. Print and scan (some leases now have clauses that they will charge you for parts and labor if the system was not returned in good working order).
5. I recommend using shipping company specializing in the end of lease return shipping.
6. When calling the leasing company for a pay off figure, never ask for a buyout. Instead ask the remaining stream of payments. When asking for a buyout you are telling the leasing company that you want to buy the system.
7. Make sure all shipments are insured.
8. Take a video of the copier making copies and include the model number and serial number. This provides proof that it left your facility in good working order.
9. Whenever calling the leasing company, always get the name of the person you are speaking with. Log the date and time of call and if you have a verbal agreement, make them send you a fax, e-mail or letter stating their position.
10. If your vendor states that they will return the equipment, make sure you have an agreement when you will supply them with the return ship to address (if you’re upgrading with a different leasing company) to the dealer and how soon they will ship the system once you have provided them with the return ship to location. This is critical since you don’t want to be stuck with late fees!
11. Never have the system moved from your location until you have notified the leasing company or they have sent you a Return Letter of Authorization. If you are upgrading your lease with the same leasing company, most dealers have a provision that allows them to ship the copier back early.
12. Have an agreement as to what is going to happen with the hard drive in the copier. Some copiers actually have a feature that will scrub the hard drive for the end of the lease. If your copier does not have this feature I recommend buying a replacement hard drive and have the old hard drive removed and return to you.
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.
