Can I get out of this Lease? I don’t need this stuff anymore!

by | Jun 12, 2013 | Blog, Business, Copier Leases, Customer Service, Fair Market Value, Financing, Leasing, Negotiation, Printing and Graphic Arts, Sales Training

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A business owner asked if she could cancel her equipment lease. The leasing company told her that the lease was non-cancellable. She asked for help her understand the term “non-cancellable.”

Of course, you can pay a lease off early. IF and ONLY IF–you are willing to pay all of the amounts detailed below.

One hundred percent of all leases contain a price to terminate the lease early. Leases are meant to run their full length. Do not confuse a lease with a loan.

If a Lessee decides that they no longer need the equipment or that is has become obsolete, they may buy the lease out early—-for a price. Read the contract closely in order to know what you are for.

The usual Lessee early payoff quote often includes:

  1. All payments then due or past-due as of the date of the early termination.
  2. Any late fees that are then due.
  3. All remaining payments through the end of the lease term.
  4. Some leases require an early termination penalty fee or a restocking fee. of as much as 10% of the remaining payments.
  5. The current fair market value purchase price of the equipment assuming that the Lessee wants to own the equipment.
  6. Sales tax on the equipment fair market value purchase price.
  7. Property taxes due on the equipment.
  8. If the Lessee does not want to own the equipment, they owe the price to pack and ship the equipment back to a location designated by the leasing company, anywhere within the Continental United States.
  9. The Lessee must insure the equipment during the return shipping period.
  10. In addition, if there is a service contract associated with the lease, the Lessee owes a penalty on that as well.

In reviewing a digital copier lease and service contract, it was discovered that the penalty for early cancellation was costly. The early cancellation on a 36-month lease contained a 12-month penalty if the service contract was terminated within the first 12-months. If termination occurred in the first 24-months, the Lessee owed a 9-month penalty. And if the contract was cancelled in the final 12-months, the penalty was 6-months of service charges.

After adding up this long list of expenses, do you still want to end the lease early or just bite the bullet? Weigh your choices. Assess the costs involved. There may not be an upside.

The bottom line is always NEGOTIATE! “Everything is negotiable if only you ask.”