The surest sign of a salesman looking to make a quick buck is when they rush you into signing the paperwork. Copier leases are complicated legal documents – and without a proper review you may not know what you are getting yourself into!
No, a photocopier lease is not a nefarious document intended to steal your money and your soul. They are intended to protect the companies who lease the copiers after all. But it’s not uncommon for sales representatives and copier reps within our industry to “hide” more ambiguous clauses.
So let’s review these lies, shall we?
#1 – You can cancel whenever you want
Like any car or property lease, a copier lease is a legally binding document. Sure you can break the photocopier lease agreement whenever you want – but be prepared to pay the consequences! To start, you are obligated to pay the balance of payments left on the term you signed for. This means that if you signed a 3-year copier lease and cancel it after the first 18 months, you will be automatically invoiced (and legally obligated) for the remaining 18 months of payments!
On top of the balance of payments, copier companies often tag on these additional fees:
- Pick Up Fee ($150 – $300) – Cost to pick up your leased copier and return it to the leasing company. As the lessee, it is your obligation to return it to the leasing company’s warehouse.
- Re-Stocking Fee ($100 – $200) – Cost to place the returned copier back into storage
- Hard Drive Security Fee ($500 – $1000) – Cost to delete any information or scanned images left on the hard drive. Be careful with this one! Most copiers offer this feature as a standard setting under the Administrator Mode. We’ve even seen some companies charge this fee to customers when the copier didn’t even have a hard drive!
- P.S.A. Discharge Fee ($50 – $100) – Cost of processing the cancellation of your lease
- Early Termination Fee ($250 – $500) – Penalty for breaking your lease early
As you can see, “cancelling whenever you want” can have some grave consequences that copier companies will hold against you! The good news is that most if not all of these additional fees are negotiable.
#2 – Delivery and return of the copier is free
“Despise the free lunch.” (Law 40 of the 48 Laws of Power by Robert Green)
Most copier companies build what they call “soft costs” into your copier lease payments. These can range from $250 – $300 each for delivery of your new copier lease and pickup of your old copier. In all fairness, often delivery and pickup fees are at the copier dealer’s cost as the freight cost, fuel cost and labour cost to deliver and pick up a copier are high. However, it’s good to know what is included in your copier lease!
#3 – You can buy out the copier at the end of the lease
This is a common question from customers that most copier sales people will dance around. It is definitely possible to purchase the copier at the end of the lease. The amount however should be negotiated up front to avoid you paying a premium!
For example, most leasing companies will charge the dealer 10% of the total asset value to purchase the copier outright. (So a $10,000 copier would cost $1,000.) The sales person will then turn around and sell the copier to the client for $3,000 with a gross profit margin of $2,000. Not a bad commission, right?
Negotiating your copier buyout fee upfront is an excellent way to ensure scenarios like this don’t happen to you. Often times you can negotiate a slightly higher lease payment in order to guarantee a $10 buyout at the end of your copier lease.
Keep in mind that buying out your copier lease isn’t always the best financial decision depending on your average monthly print volumes. If your print volumes are high, it might make sense to lease a new copier with lower service rates than to continue servicing a 5-year old copier that will have higher repair costs.
#4 – Your service rates will increase based on the national inflation rate
Copier sales people are notorious for saying that service rates will only increase by 2-3% per year only to later have them increase by 7-10%!
It is standard practice to increase your service rates throughout the lease term as the cost of repairs increases the older the copier gets. (Yes – copiers depreciate just like cars!) We recommend negotiating your service rates being fixed for the first two years, followed by a maximum increase of 5% per year. This is a very reasonable ask that gives the dealer some comfort knowing they can cover their repair costs and make a little money. At the end of the day, they are in business to make a profit like everyone else. It’s how our local community grows!
#5 – Your business insurance covers the insurance on your copier lease
Almost all leasing companies require insurance on your copier to ensure it is protected in the event of a fire, flood or other disaster. Two pieces of communication are required here:
- Speak to your insurance provider and provide them with the make and model of the copier lease you are paying. If your insurance provider doesn’t know about the asset, they might not protect it!
- Provide proof of insurance to the leasing company. If you don’t, they will invoice you an insurance premium every month!
We’ve seen several instances where customers were charged a small premium every month for insurance even though their copier was protected under their business insurance. They simply forgot to give proof of insurance to the leasing company! Make sure you take the right steps to protect your business but also protect your finances.
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