How to Protect Yourself From a Bad Copier Lease Agreement

If your business is on a tight budget, leasing more costly office equipment like a copier may be your only option. In addition to saving money, many businesses prefer to lease office tech equipment to keep machinery up-to-date to avoid having to purchase a new model when advanced features are introduced to the market.

Additionally, Entrepreneur.com points out that some companies can benefit from copier leasing since they can budget for predictable monthly expenses; in a survey from the Equipment Leasing Association, 35% of participants named this as the second highest benefit of office equipment rental.

If you've looked into leasing a copier, you may have been overwhelmed upon first glance at a copier lease agreement. Not only can it be difficult to wade through the red tape and complicated leasing jargon, but it's often hard to find a fair lease agreement that will protect your interests as the customer.

What to look for in the right copier lease contract

First and foremost, it's critical to know what you’re agreeing to before you sign on the dotted line. Whether you have to hire an attorney or appoint a member of your staff to read through a contract in its entirety, make sure that you understand each contract clause before agreeing to a lease.

But not so fast… Before you're given the opportunity to read through a copier lease, you may be presented with several options in a rental agreement. As a business owner, it's your responsibility to determine from the get-go which lease will best benefit your company.

The most common lease options include an operating lease or a capital lease. While both lease agreements have advantages and disadvantages, the deciding factor may come down to tax benefits. In this case, it’s recommended to consult with your office accountant to determine what type of lease will provide a better return for your business come April 15.

From there, it's time to comb through the details in the fine print in a lease agreement. As you read through each clause in a contract, you may come upon stipulations for an automatic payment increase, an evergreen lease, and even a fair market value clause.

  • If your lease contains an automatic payment increase, automatic payments can increase annually based on the terms of the agreement by as much as 10%.
  • An evergreen clause will allow for automatic renewal if you fail to terminate the agreement at the end of the lease term; many vendors require a 90 day notice in writing.
  • A fair market value clause may require a balloon payment at the end of a lease term if you want to purchase the office equipment outright. Most of the time, this amount will not exceed more than 25% of the original equipment price.

Before signing a copier lease, it's critically important to ask the tough questions - like who will pay for service copies and prints during a service call? When a technician visits, they may run hundreds of impressions; it’s in a business’s best interest to negotiate for a vendor to be responsible for these costs in a lease agreement.

Lastly, take the time to verify if you as the customer will be paying for all of the supplies used in a copy machine. Many lease agreements can last up to five years; if you are responsible for purchasing copier supplies, these extra monthly costs must be added into your business budget before agreeing to a lease.

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