22 Things you Should Know About Copier Leasing

22 Things you Should Know About Copier Leasing

Mar 26, 2024 | Office Technology, Copiers and Printers

Copier leasing can become an anxiety ridden task if you don’t know how it works. We’ve compiled a list of 22 Frequently Asked Questions to help you become a more informed buyer. With this information, you’ll be able to confidently make a better purchasing decision.

By the way – if you’re looking for a copier dealer on Delmarva, we’d love to chat! We have competitive programs to help you move to Sharp MFPs and a fantastic Managed Print program.

Why should I consider leasing a copier instead of buying one outright?

A: Copier leasing often lets you obtain a new copier with $0 out of pocket, allowing businesses to conserve capital for other needs. There might also be tax advantages to leasing a copier under an Operating Lease.

How do Copier Leases Work?

A: Here’s a timeline of a typical lease agreement:

  • Usually your copier dealer has a preferred partner or partners. They’ll submit your business information to them for underwriting.

    You can source your own leasing company if you’d like, but chances are you’re going to pay higher interest rates. A good dealer is going to be working the major leasing companies to secure lower rates for their customers, because that helps them win more deals. Dealers can offer millions of dollars of business, so volume is on their side.
  • The Leasing Company will return an Acceptance or a Denial. You’ll generally be accepted if your business has had credit lines for 2+ years and nobody has reported the organization as a bad pay.
  • In some instances, they might issue a conditional acceptance with a Personal Guarantee. This often happens in new business situations. Sometimes this is your best option. But generally speaking, you don’t want to personally guarantee a business transaction if you can help it.
  • If you like the financial aspects of the lease, sign your copier proposal and your lease agreement. Don’t sign the acceptance part yet – that starts your payments!
  • The copier dealer will order equipment and make arrangements to install it.
  • After the copiers are in place and you’re happy with the quality of their work, sign the Acceptance portion of your copier lease.
  • The dealer will submit all the necessary payment to the leasing company.
  • Expect to make your first payment in a month or whatever your payment period was designed to be.
  • At the end of your payments, you’ll either return the copier to the leasing company (Operating Lease) or keep the copier (Capital Lease).

What is the typical lease term for a copier?

A: Copier lease terms typically range from 36 to 60 months, providing flexibility for businesses to choose a duration that suits their needs. In an ideal world, you match the lease term to your use case and the duty cycle of the MFP. One dirty trick copiers dealers often employ is a 63 month lease. It can make your payments look lower, but you’ll often be expected to renew your maintenance agreement on an annual basis. If you run out your lease before getting a new copier, you could end up paying for 9 months of maintenance you’ll never receive.

Can I upgrade my copier during the lease term?

A: Yes, many leasing agreements allow for equipment upgrades, enabling businesses to stay current with technology advancements. What you need to know is that the balance due on your current lease is usually rolled into your new lease.

We’ve been able to use competitive incentives from our copier manufacturer to encourage new customers to switch to Sharp MFPs to minimize the financial penalty of upgrading early. We’ve also negotiated loyalty benefits for customers who upgrade and stick with their current leasing company. If you have a good payment history, leasing partners like to hold onto your business for the longer term. And with interest rates being higher than in the past, leasing companies can be flexible getting you out of a less profitable lease and into a newer one with higher interest charges.

Are maintenance and repairs included in the copier lease agreement?

A: It depends on the lease terms. Some agreements include the maintenance agreement and copier repairs, while others may require additional service contracts.

You’re much better off if you keep maintenance out of your lease, because it causes you to pay interest on prints you may or may not make in the future. It’s a hidden cost that many people looking to finance a copier aren’t aware of. If your copier dealer is offering to wrap your maintenance costs as pre-paid clicks in your lease, look for a more ethical copier dealer!

What happens at the end of the copier lease term?

A: It depends on your lease type. In an Operating Lease, businesses typically return the office equipment to the leasing company to make room for a newer, better MFP. They also have the option to purchase the equipment if it is still doing a job meeting their needs. In a Capital lease, you typically pay an extra dollar at the end of the lease and own the copier outright.

Is it possible to negotiate the terms of a copier lease?

A: You are always able to choose the lease type and the payment schedule that makes the most sense for you. Sometimes you might want to defer payments for a short period. You can also elect to wrap maintenance into your lease (although it’s not a good idea). You can also shop for a better lease rate with another copier leasing company.

Are there tax benefits to leasing a copier?

A: Generally speaking, if you are in an operating lease you can expense your lease payment against your income. If you’re in a capital lease, you’re depreciating your copier and expensing the interest in your lease agreement. If you buy a copier outright, you’re typically expensing the equipment over 5 years, though there might be accelerated depreciation options available to you. Keep in mind that everybody’s tax situation is different, so you should consult with a CPA for the best accounting advice for your situation.

Can I lease a copier for a short-term project?

A: Yes, some leasing companies offer short-term leases to accommodate temporary or project-specific needs. You might also want to investigate a copier rental agreement. Many document management companies will keep loaners and spares to ensure customers are not down long-term due to parts availability issues.

Inacom does offer copier rentals and managed print solutions for these types of situations. Our copier rentals include a base rate for delivery, installation, and removal for the duration of your needs, and a variable maintenance fee for the actual prints you make on the copier.

What factors should I consider when choosing a copier leasing company?

A: For most copier buyers, the interest rate is the biggest factor. But consider lease terms, monthly payments, customer reviews, customer service, and the company’s reputation in the industry, too. You might also see if your current leasing company is willing to offer incentives for your continued loyalty.

Can I lease a copier for a new business?

A: Yes, many leasing companies offer leasing for new businesses. They will require a personal guarantee and write the deal using your personal credit score. Sometimes you need to get your lease from a small niche leasing company that will charge a higher rate of interest but accepts riskier leases. You might find that renting a copier makes more sense in these situations. A good copier dealer will offer a rental until your new business has two years of positive payment history. At that point, it’s pretty easy to lease a copier through the business without a personal guarantee.

Are there penalties for ending a copier lease agreement early?

A: Yes, ending a lease agreement prematurely usually results in penalties. You’ll often end up owing the total value of future payments right away. It’s important to carefully review the terms and conditions before signing.

Can I lease multiple copiers for different office locations under one agreement?

A: Absolutely. This isn’t a problem for the big, national leasing companies. You can also negotiate co-terminus leases to get all of your printing equipment in sync. We often do this with larger organizations so that we can provide the best volume discounts by consolidating all purchases across the fleet.

What happens if the copier malfunctions during the lease term?

A: Most organizations enter into a maintenance agreement with their copier dealer to handle these issues. Leasing companies really want to lend money, not fix copiers. You are responsible for returning a working MFP to the leasing company at the end of your lease.

Are there hidden fees in copier lease agreements?

A: Most leases are quoted without any applicable taxes. Since these are pass-through charges, they should be very similar across all of your quotes. Typically there is a sales tax in most states. Some jurisdictions may impose a use tax on the equipment, as well. Keep in mind that leased equipment in an operating lease is actually owned by the copier lease company. If your organization is exempt from property taxes, you’ll still have to reimburse the leasing company for the use of their equipment. For more detail about the hidden fees of copier leases, check out this article.

Can I negotiate a buyout price for the copier at the end of the lease term?

A: In some cases, buyout prices are negotiable. Sometimes the leasing companies will accept less for the equipment if you ask. They tend to be most flexible if you are entering a new lease with them and you have a good payment history.

How is a copier lease different than a rental agreement?

A. They’re both very similar. In either arrangement some company is willing to provide you a copier in exchange for recurring payments. Leases are highly structured, and you can lease to use or buy the machine. Rental agreements tend to be more informal agreements, used to meet very short term needs.

Can I lease a copier if I have less-than-perfect credit?

A: Yes. Some leasing companies offer options for businesses or individuals with less-than-perfect credit, although you should expect to pay more interest over the course of the lease. You might find that it makes more sense to do a rental agreement with a local copier company instead.

Is it possible to include additional accessories or features in the copier lease?

A: Absolutely! Every leasing company’s program is different, but they all will underwrite a certain percentage of copy machine’s MSRP. Copiers are a very competitive business – nobody pays MSRP. So there’s some wiggle room to play with. We can often use the new copier as collateral and fit in computer or server upgrades and more. Sometimes we fix business computer issues *and* improve cash flow at the same time!

Can I transfer my copier lease to another business if needed?

A: Usually. Typically, the leasing company will run a business or personal credit check on the “new” company involved, and if the report meets underwriting criteria, they will alter the lease agreement.

What information do I need to provide when applying for a copier lease?

A: Underwriting standards vary by leasing company. If your organization is established, the official business name, contact info, and a DUNS number are sufficient. If you’re in a new business or have a less-than-ideal payment history, expect to provide financial statements and references.

What are my obligations at the end of the lease term?

A: That depends on the type of lease that you have.

Capital Lease:

This one is easy. Your last payment will include a pre-negotiated “sale price” for the machine. It’s often just $1. Sometimes it’s up to 10% of the purchase price. After that last payment, you own the equipment.

Fair Market Value Lease:

Here’s the tricky one. Since the leasing company is retaining ownership of the machine after the lease term, you’ve got to send it back to them. This means finding a shipping company (there are copier shipping companies out there). They will offer to prep the copier and handle the logistics of getting it back to the proper receiving warehouse. Unless you are a distribution or logistics business, it’s probably more cost effective to let one of these companies do the work for you.

You might also look to the copier dealer to handle this work, as well. Since they’re a regular customer of these copier return specialists, they’re often quoted better rates. Figure these dealers can often fill a semi trailer in one stop, making transportation as cheap as it will ever get. It’s also not a big deal to have the dealer’s copier technicians prep the machine for ship back, meaning the return crew has less processing work to do.

Your other option is to buy the equipment at the Fair Market Value. It’ll typically be around 20% of the lease’s initial price. Feel free to haggle, though. If your current copiers are last generation or the leasing company has too much inventory for resale at the moment, they might be willing to make a deal. When you consider the cost of ship back sometimes those old copiers are very inexpensive. If your copier was well maintained and currently in great shape, it might be good for a few more years of service.

Travis Fisher

Travis is Inacom’s Executive Vice President, tasked with assisting customers with their web based marketing initiatives. He’s kinda famous for his BBQ. He lives in Easton, MD with his amazing wife, two kids, and two dogs.

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