5 Questions to Ask When Leasing a Copier
When it comes time to lease a new copier for your business things can get a little complicated.
You need tread very carefully when doing your research and getting your proposals together.
Depending on the size of copier you need this could be a significant acquisition for your business.
If you’ve leased a copier before you know that there can be a lot of questions to ask to make sure you don’t get burned.
Believe me when I say that organizations of ALL sizes get burned on a regular basis when leasing a new copier.
I know because they call and email me all the time after reading my cautionary blog posts. Like the one you’re reading right now.
I’ve been contacted by organizations locally here in the in Baltimore, MD & Washington DC area as well as all over the world. Literally.
I’ve helped people in the US, Australia, the UK, South Africa, Kenya and several other countries in Africa.
What I’ve found very interesting is that no matter where they’re from the issues these organizations have with copier companies seem to be the same.
In other words, the tricks and gimmicks used by unethical copier companies seem to be about the same no matter where they’re located.
In order to get treated fairly there are many questions you could ask prospective vendors about their copier lease but I’ll give you 5 really important ones here.
1) What kind of copier lease are you quoting me? Fair Market Value or Dollar Buy Out?
90% of the time when leasing a copier you’ll be offered either a Fair Market Value Lease or a Dollar Buy Out Lease.
The first type of lease is the Fair Market Value Lease. This is the most common of all copier leases. About 99% of the copier leases I write are fair market value leases. The way that this lease works is that at the end of the lease term the leasing company will tell you what the fair market value of that machine is and then you can buy it from them for that amount of money.
Kind of like a Kelly Blue Book valuation for copiers.
If you don’t want to buy the copier for the fair market value than you will be required to send the copier back to the leasing company at your expense. Typically if you lease a new copier from the same copier company they will come pick the machine up from your office and pay the shipping charges to send it back to the leasing company.
Copier companies do this as a thank you for leasing another copier through them. This is a helpful service that copier companies offer because if you had to send the copier back yourself in my experience you’d be looking at any where from $200.00 for a small copier up to $500.00 plus for a larger machine.
We provide this service here at my company and I like the fact that my customers can focus on the core tasks in their business and let me take care of the copiers. We remove the old copier and install and network the new one within an hour or so. My customers literally have to do nothing and I feel that’s how it should be.
The second most common type of lease is the $1 Buyout Lease. Although it’s the second most common it’s only about 1% or less of the leases I see in my day to day work.
The $1 buyout lease means that at at the end of the lease term you can “buyout” the copier from the leasing company for one dollar. Now you may be wondering why you would choose any other type of lease over this one. The answer is that this lease will cost you more than the others in interest and fees during the life of the lease but in the end you will pay less than a fair market value lease.
So should you choose a fair market value or a $1 buyout lease?
It may be helpful to think of the decision in the context of how you buy vehicles.
If you’re the type of person who finances a vehicle, keeps the vehicle over the term of the loan, pays it off and keeps the car as long as they can until it falls apart then you may want to consider a dollar buy out lease.
If you’re the kind of person keeps a vehicle for 2 or 3 years, trades it in because you like to have the newest, most efficient technology and don’t want the hassles that come with an aging vehicle than you may want to consider a fair market value lease.
Again, the Fair Market Value Lease is definitely the most common chosen option for businesses. As I stated earlier about 99% of copier leases these days are Fair Market Value.
2) What happens to the hard drive after the lease ends?
This is a very, very important question.
Virtually every copier that you can buy today will have a hard drive installed.
At the end of the lease when the copier leaves your office you have to make sure that it doesn’t end up in someone else’s hands with your company data on it.
There are a few ways of accomplishing this. You can have the hard drive removed and given to you, removed and destroyed or wiped clean of all data.
This is usually a service that your copier vendor provides but if they don’t you need to find a company that does.
This is not something you want to take lightly. If you do, bad things can happen.
Affinity Health Plan of New York was fined $1.2 Million because they sent copiers back to the leasing company without removing or wiping the hard drives.
2 years ago I wrote a short post on this blog about the incident and others like it.
The short post also included a very interesting CBS undercover video.
Click this link to watch the CBS undercover video.
Remember, in the end the Feds will come after you, not the copier company, if your customer’s data gets out.
Take the necessary steps!
3) Is property tax included in the copier lease payment or am I going to get a separate bill from the county?
This issue is one that has ticked off many business owners and executives.
When you lease a new copier your local county government will asses a property tax.
If the property tax is not paid by the copier leasing company than the organization that leased the copier (that’s you) is responsible.
So that none of my customers get a surprise bill for property tax , ALL of the copier leases that I write in my day to day work include the property tax.
Be sure to ask the copier sales representative if property tax is included in the lease. If they say yes, ask to see it in writing.
It may be uncomfortable to push the issue with the salesperson but remember, you have the right to see everything in writing.
If that’s a problem for them, I’d consider looking at other copier companies. More ethical ones.
4) Is the Copier Maintenance/ Service Agreement Rolled into the Lease?
When you lease a new copier you’ll want to put a service or maintenance agreement on the copier.
Typically copier maintenance plans are either billed as part the lease in which case you’ll only get one bill, or billed separately from your local copier company in which case you’ll get 2 bills.
One from the copier company for the service agreement and one from the leasing company for the lease.
5)If the answer to number 4 is yes than you should have a few follow up questions.
A) Can I adjust the minimum number of pages in the service agreement up or down?
All copier service agreements contain a minimum number of printed pages (copies or prints) as part of the agreement. Usually that number is based on your recent usage history. You have to be careful here because if you pick a number too high you could end up paying for a lot of copies/prints that you didn’t use and if you go too low you may end up with a large overage bill at the end of the quarter or year.
Copier Service Agreement Overage Example: You sign a service agreement with a monthly minimum of 5,000 black pages.
If you only use 4,000 pages that month you will still pay for the 5,000 because that was the minimum that you agreed to and signed off on.
If you were to use 5,500 black pages one month there are a few things that can happen. I’m not sure about other parts of the country but most copier companies in Baltimore, Maryland, which is where I’m located, will accrue those overage pages and bill you for them on a separate bill quarterly. The other option I’ve heard of is to bill the overages annually.
In this example we’ll use quarterly overage billing.
So if you printed/copied 5,500 black pages per month for the first quarter of the year than you would have accrued 1,500 overage pages for that quarter. 500 extra pages (over your 5,000 minimum) times 3 months = 1,500 overage pages. Sometimes copier companies will charge you an increased price per page for overage pages. This is something I’ve never understood because in what business do you penalize customers for buying MORE of our product than initially anticipated? But nonetheless some copier companies do it, so be sure to ask.
In the above example you would get a separate bill at the end of the quarter for 1,500 overage pages.
Here at my company we allow the customer to move their monthly minimums up or down whenever they want during the lease with no questions asked. Obviously this is the best case scenario and you should try and find a company that will allow you that freedom. If they say that they will do that you need to get it in writing.
B) Am I paying interest and/or any type of fees on the copier service/maintenance plan because it’s part of the lease?
Obviously when you lease a copier you will pay interest on the base amount of the copier. This is how the leasing company gets compensated for loaning you the money. If the copier maintenance agreement is included with the equipment in the lease than you may be paying interest and fees on the service agreement as well as the equipment. You want to avoid this if you can.
One way is to have the bill for the service agreement sent to you by your copier company. In other words, you pay the local copier company for the service agreement and the leasing company for the lease. You will get 2 bills but I think that’s better than paying interest on the maintenance agreement when you don’t have to. The interest on the plan can really add up over time.
The second and best way to handle this is when the copier company has a special arrangement with the leasing company to do what is called a pass-through. The way a pass-through works is that the leasing company will collect the money for the service agreement as part of the lease payment and pass it through to the copier company.
As part of this agreement the leasing company agrees to not to charge interest or fees of any kind to you the customer or the copier company your working with. They do this as a convenience for the copier company who is usually sending them a lot of new customers like you. In the case of a pass-through you the customer only gets one bill from the leasing company for once amount per month.
Here are our company we have a pass-through agreement with our leasing company. It’s a great feature.
6) Bonus Question Do I pay the shipping charges to get supplies (toner & other consumables) sent to me?
Even though many copier companies say that their copier service agreements include “everything but paper and staples” what they may not tell you is that you will be responsible for the shipping charges when supplies such as toner are sent to your office. This could be something you want to ask about and negotiate if possible.
Otherwise you may get a surprise invoice for shipping when you need a new toner cartridge.
I hope this list of questions was helpful to you.
As always if you have any questions don’t hesitate to contact me using the easy form below or call me directly at 443-570-0414.
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You can reach me at 443-570-0414 or edworthington@outlook.com.
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