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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.
Thanks for stopping by. Please tell anyone you know looking for a copier to check out this site in order to save money and avoid rip-offs.
If you’re in the Baltimore/DC Metropolitan area and are considering purchasing a new copier, printer, scanner. shredder, postage or mailing equipment please let me know. I’ll provide you with a fair, no BS proposal from our line of quality products from Xerox, Konica-Minolta, Lexmark and HP.
We also offer a full suite of document management and mobile capture software.
You can reach me at 443-570-0414 or edworthington@outlook.com.
How to Cancel a Copier Lease- Sample Letter of Intent to Cancel Copier Lease
If you are leasing a copier for your business, professional practice or non-profit than your lease will no doubt have a specific term attached to it. A term simply means the length of the lease. Most copier lease terms are either 36, 48 or 60 months.
Most people believe that if they don’t want to keep the copier that the leasing company will contact them at the end of the lease and they can just send it back.
That’s where the mistake is made.
The leasing company usually will not contact you at the end of the lease and if you don’t send them a “letter of intent” to discontinue (cancel, terminate) the lease they will keep billing you the same monthly payment you’ve been from the beginning.
I’ve personally seen a real life case where a medical practice located in Westminster, Maryland (a suburb of Baltimore, Maryland) paid on their copier for an extra 4 years after the original lease ended.
With the amount of money they paid over the 7 years the could have literally bought 3 copiers. All because they failed to understand when their lease actually ended and what their responsibility was if they wanted to end the copier lease.
Whether you want to send the copier back at the end of the lease or you want to purchase the copier from the leasing company you must send them a letter of intent to terminate or purchase during the time widow specified in the lease you signed. That time window varies by leasing company but typically is something like, “no later than 60 days before the lease ends but no sooner than 120 days before the lease ends”.
You may be wondering why you have to send a letter of intent to terminate a copier lease if it ends on a specific date anyway. That’s because in the eyes of the leasing company the lease isn’t over until they receive your letter of intent within the specified time window.
It gets worse. With some leasing companies if they don’t receive your letter of intent in time they may not only keep billing you the same monthly payment but they may renew your lease for a full year.
So if you were to discover that your lease ended 3 months ago and you contact the leasing company thinking you can just end it now you’ll be in for a rude awakening. If you want to terminate the lease after this full year automatic renewal has happened than the leasing company will say, “no problem, you just have to buyout out the remaining months plus a few early termination fees to boot”.
To make this magical journey even more fun guess what happens if you were to forget to send in the letter of intent during the specified time window at the end of your one year automatic renewal? You guessed it, you get to spend another exciting full year paying the wonderful leasing company.
The moral of this story is two-fold: 1) know when your copier lease ends and 2) send in your letter of intent during the time window specified by the leasing company or else you’ll regret it.
If your wondering what a letter of intent should say then click on the link below for a template. Just fill in your info and send it off. I would recommend certified mail. 🙂
Letter Of Intent To Terminate Lease
If your organization is located in the Baltimore, Maryland, Washington DC or Northern Virginia metro areas please contact me to receive a competitive quote about 6 months before your current lease ends. It never hurts to get a competitive quote. It tends to keep your current vendor honest.
My company carries Toshiba Copiers, HP & Lexmark Printers, Fujitsu Scanners and Dahle Professional Shredders.
In addition to the hardware listed above we provide software and services such as Managed Print Services, IT/Network Services and a full line of document management software.
If you have a general copier buying question or would like a free copy of my book, The Ultimate Copier Buying Guide, just fill out the form below. Thanks for stopping by. Come back often and most of all…… HAVE FUN!
Copier Leasing Options for Baltimore Businesses- The 3 Types of Copier Leases
Once you’ve decided to invest in a new copier for your business in Baltimore your next step is to decide whether you’d like to purchase or lease the copier. For tips and information on how to make that decision click over to our article titled “How to Decide if You Should Buy or Lease a Copier for Your Baltimore Businesses”.
If you have decided to lease a copier for your business there are only 3 lease options to choose from and these days only 2 options are truly relevant.
The 3 types of copier leases are:
Fair Market Value– The most common of all copier 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.
$1 Buyout Lease– The next most common type of lease. The $1 buyout lease means that at at the end of the lease term you can “buyout” the copier from the leasing company. 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. The leasing company will get their money one way or the other.
10% Lease– The least common and very rarely used kind of copier lease.
Which type of lease you choose should be based on your situation and companies needs.
If you have further questions about copier leasing and you would like to speak to a copier leasing expert please contact me, Ed Worthington at 443-570-0414.
Copier Lease vs Buy: How to Decide if You Should Lease or Buy a Copier for Your Baltimore Business
When you are ready to get a new copier for your business there are many good copier companies in the Baltimore metro area to choose from. Once you have selected the copier company one of the first decisions you will have to make is to lease or buy the copier.
Back in the 80’s and 90’s the ratio of buy vs lease was about 50/50.
Today about 80% of businesses, medical practices, and schools (public and private K-12 as well as university) in the Baltimore area lease their copiers.
So why the major increase in the number of leases? The main reason is that technology changes so fast with copier/multifunction devices that it may pay to lease rather than buy.
A copier isn’t a copier anymore. Back in the 80’s and even the 90’s copiers just copied. Today they copy, print, scan, fax, and are an integral part of the document management of a professional office.
With so many businesses attempting to go paperless, the copier/multifunction device becomes a powerful technology tool.
A copier today is a computer that performs multiple document management tasks.
With a lease a business can just budget a certain amount of money for the copier and then every 2-3 years upgrade to a new machine with the latest technology that will help their business become more efficient.
As a bonus to the leasing option, in many cases I save my client money on their new lease due to the fact that technology gets cheaper and more energy efficient.
That’s the scoop on leasing. Now let’s talk about purchasing your copier.
Purchasing your copier also has it’s benefits.
The main benefit is that you save money by not paying fees and interest charges associated with a lease.
Some of my small business clients have expressed that fact that they like to run their business with little or no debt.
Technically a lease is not debt, but you are bound to the terms of the lease so many business owners and professionals consider it the same as having debt.
Another advantage of purchasing a copier is that you can do whatever you want with the copier.
You can keep it for as long as it makes financial sense to do so. With the reliability of today’s technology you could have a machine for several years without having a lease payment.
Also when you purchase a copier you don’t have to return the machine to the leasing company as is the case with most leases.
On the down side of purchasing many small businesses find that $8,000 to $10,000 for a mid to high end machine is a lot of money for to pay up front.
So there you have it. These are the main points to consider when deciding whether to lease or purchase your copier.
As I stated earlier about 80% of my clients lease their copiers for the reasons above.
Whether you lease or buy should be a decision based on your how you will use the copier/multifunction device as well as your business objectives.
If you have any further questions about leasing or purchasing a copier please feel free to call or email me anytime.
Ed Worthington 443-570-0414 or ed@edworthington.com.