Lease rental periods, typically vary in length from 3 or 5 years for photocopiers, 6 years for franking machines and 7 years for telephone systems, a general rule of thumb is the longer the period, the cheaper the payment for you and the more money for the dealer, plus of course you are tied to the dealer for that period.
Yes you can stay abreast of technology but make no mistake it will not be at the expense of the Finance company or the equipment supplier, when you entered into the agreement, you made a commitment to pay a set number of payments and when you want to end that agreement by upgrade or settlement, YOU are the one who will make the payments you originally committed to.
The salesperson may tell you there is a trade-in allowance of £xyz but invariably that sum is added to the cost of the replacement equipment before calculating the new monthly or quarterly payment, in fact the equipment you have lovingly nurtured for the past however many years, the dealer gets for free because you are paying for him to do so.
We have seen some of the less scrupulous dealers out there run a maintenance agreement alongside the lease term, which means when you upgrade the equipment lease, they are entitled to the balance of the remaining maintenance term payments and they take them too.
So you can easily find yourself in a situation where changing the leased equipment early leads to you paying in excess of £20,000 for new equipment which you could probably have bought outright for around £5,000. You may think this is not possible but I know of a company in Essex who leased 5 photocopiers each with a manufacturers RRP of £15,200 (Total £76,000) yet the value of the finance leases totaled £1,100,000 (1.1 million pounds) and 2 of those copiers remained in bubble wrap in the customers warehouse.
You can avoid becoming a victim by following these simple rules:
1) If you decide to lease equipment for 5 years, then keep it 5 years or get a shorter lease.
2) Only ever sign fixed term lease agreements, otherwise the onus is on you to cancel
3) Never sign maintenance agreements longer than 12 months at a time.
4) Take at least 24 hours to read and fully understand any agreement before you sign, if you are unsure, ask and get any reply in writing signed by the owner of the agreement.
If you are unsure about or want an unbiased opinion on a new agreement you are about to enter into, or you would simply like peace of mind about the agreements you already have, call us on 020 8695 7301 or email us or go to our contact page and request a contract review now, it will cost you little and could save you thousands.