A simple service and maintenance agreement can cause far more financial damage than an equipment lease, although often when a lease is upgraded the dealer will include the cost of the remaining term of a service agreement in the new lease.
So let’s look at leasing, when you have agreed to lease the equipment what will happen then? Will your proposal go directly to the actual financier/lease company or will it go to a lease broker and be sold to the highest bidder?
Will the broker keep all of the finance with one Lease Company or will they sell your ‘deal’ to multiple financiers?
We have seen a number of instances where dealers have sold existing equipment as new to a new leasing company without paying off the original lease. This leaves you the client with multiple leases to pay and a big problem when the leases end because you have to return the equipment to the owner at the end of the lease, which is difficult when the same equipment has been sold to a number of companies,
We have seen a case recently where the dealer has sold the equipment to 3 leasing companies over a 3 years period, each time the equipment was listed as new, the dealer retained the full value of the settlement allowance and the capital equipment cost on the 2nd and 3rd leases amounting to over £600,000.00, promising to refund the quarterly lease payments to the customer. They kept up this arrangement for a period and then stopped paying leaving the client to make the quarterly payments.
The dealer has affectively used the client to fund the expansion of his business and left the client with the bill - illegal, immoral and totally unnecessary.
So which leasing company actually owns the equipment?
Well technically they all do and you will have signed a document confirming you have taken delivery and satisfied everything is working as it should. Therefore, you are liable for the replacements but the reality is, if you are lucky, the leasing company or broker will allow you to pay an amount to cover the deemed value whereas, if it is a dealer who has title and you do not upgrade the equipment with them, you could pay a considerable sum.
So make sure when you enter into a lease, you do not sign anything to say the equipment is installed and working until it really is.
If you are upgrading and there is a sum outstanding on a former lease which is to be settled by the new deal, ask the new leasing company to settle the old lease directly with the old leasing company and not the dealer.
Or contact Chas Jordan, Champion of Fair and Honest Contracts for an independent review. Remember we do not sell any other products or services, we focus on what is important; in these cases, fairness in everything we do being our highest priority.