When was the last time you took a look at the lease on your company’s copier? When you did what did you find? How much did you actually understand from what you saw? Leases for copiers can be very confusing no matter how much experience you have. You will find complex clauses centred around strange terms like “origination fees” and “residual value characteristic”. All in all, these leases can be very confusing and carry the potential for great misunderstandings.
What do most copier leases have in common?
Most copier leases will have a few things in common. For the most part, leases will have a fixed duration, a documentation fee also called an “origination” fee, a reference for a service agreement and a residual value characteristic.
But, what does all this mean? Let’s take a look at some of these potentially confusing terms and phrases.
Fixed and defined duration
Copier leases are not “till death do us part” agreements. There are clearly defined limitations and durations.
A residual value characteristic
Most copier leases will refer to a “residual value characteristic” at the lease’s end. This means that the copier still retains some sort of financial value at the end of the lease. The most common type of lease is the “fair market value” lease and states that the leasing company will own the asset at the end of the lease. This provides the customer with the choice to buy the copier at “fair market value” — or “residual value”— once the lease duration is completed.
Then there is the dollar out capital lease, in this type of lease the customer takes control of the asset from the start of the lease. The customer will then grant the copier company interest for the asset until all the payments have been completed. At the end of the lease, the customer will be allowed to buy the copier for $1. You can review the differences between “dollar out” leases and “fair market value” leases here.
The documentation or origination fee
Copier leases will typically have a documentation or origination fee that is paid once and is usually around $100, sometimes less. This amount is paid by the customer to the leasing company to cover the costs of the leasing paperwork.
Service agreement references
The lease may also make a reference to the service agreement. For example, it may mention specific service rates and allowances. On the other hand, not all leases will even have the service agreement.
What are some leases different from others?
Now that you have a basic idea of the standard components of copier leases, we will now take a look at what makes different copier leases unique. Different leases will vary by type, length and method of calculating expenses. Let’s take a look at each of these points in detail.
Most organizations will choose a 39- to 63-month lease period. The shorter the lease period the greater the price the customer will pay. Longer leasing periods will have lower rates.
Another good reason to choose a longer lease period is that it allows the company to stick with a reliable copier dealer for longer periods of time. This is in accordance with the “if it ain’t broke, don’t fix it” school of thought.
A longer lease will also allow the company to avoid the tedious task of seeking out a good copier lease every 6 months.
Page numbers and paper size
As a rule of thumb, the larger the size of the paper the company will be printing on, the more expensive the lease prices will be. For example, a company that is printing on tabloid-sized papers (11×17) will pay higher rates than a company that is printing on regular legal- or letter-size paper.
Leasing costs can also be increased by the number of papers that will be printed each month. Companies that print more paper will see higher printer costs.
Type of lease
Leasing a copier is very different from renting. A copier rental allows the customer to pay according to dollar outpricing or fair market value.
That being said, there is no option to purchase the asset at the end of a rental plan. According to Evan Boddicker, the sales specialist working at Great America Financial Service. And this is what makes renting copiers different from the fair market value lease or dollar out a lease.
At the end of a rental lease, customers will be allowed to continue renting the asset on a monthly basis if they choose to renew the contract.
What makes a copier lease more expensive?
There are some important facts that will increase the costs of a copier lease and make it more expensive than renting.
The type of copier your organization is leasing will be one factor that affects the price of your lease agreement. If you need a copier with especially advanced features and higher capacity, you can expect to pay a bit more.
Copiers are not cheap devices, but they are certainly more cost-effective when leased. The average cost for a good copier at the lower end of the market is about $1,000 while higher tier options with greater performance can be as much as $100,00. The hardware needed for these costly copiers will be more expensive according to the age, brand and speed of your copier as well.
Don’t forget that certain add-ons can also inflate the value of your copier price. Certain add-ons like a multi-purpose tray, software upgrades, document finishers and USB ports represent greater technology and functionality and therefore increase the price.
As we can see, copier leases are very different from each other and contain many different specifics. These and other details can make some lease agreements more expensive than others. The best course of action is to find out exactly what your organization needs in a copier to ensure that you are not paying more for something you don’t really need.