MULTIFUNCTION COPIERS AND PRINTERS | 10 MIN READ
How do I get out of my copier lease?
The short answer – you can’t. Not really. You have entered into an agreement for a pre-determined amount of time, for a pre-determined amount of money; and the leasing company will collect on all their payments owed. Until you arrive at the date of your copier lease return or upgrade, it’s yours.
So, choose carefully and thoughtfully on what your company’s needs are now and what they will be 60+ months down the road. Regarding copiers, we advise our customers this way every single day.
Still, it’s possible you may be confusing a copier lease with your copier service contract. People often use these phrases interchangeably, but they are not one and the same.
By the time you finish reading, you will understand the differences between the two and what to look for in the next contract you sign. Becoming better informed will arm you with the tools to make sure you understand what you are agreeing to before putting pen to paper.
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A copier lease sounds like a rental because it almost always is a rental. Even though it is possible to purchase your copier at the end of its lease agreement, most business owners prefer to upgrade their equipment and begin a new lease.
Why? Like computers, phones and other technology, multifunction copiers become obsolete rather quickly. Technology is constantly being updated and the copiers of today do far more than simply make copies.
It’s important to understand that when you sign your copier lease, at the top of the page will read something like: THIS IS A BINDING CONTRACT AND CANNOT BE CANCELED FOR ANY REASON. This means exactly that. “But what if my service is terrible?”
The leasing company includes language stating that you, the lessee, are responsible for selecting a vendor and are therefore not responsible for the quality of service you receive.
They care that you agreed to lease the machine for 12-60+ months, and that fact hasn’t changed. Canceling your copier lease isn’t possible but canceling your service agreement is a different story, and that is where things can get interesting for you as a customer.
In the copier business, a Service Agreement is the contract/agreement you have made with a copier dealer or manufacturer regarding the terms of their service, including what they will provide you and at what cost.
A copier lease only concerns the machine(s) being leased. The service agreement is everything else, including: service calls during downtime, remote support, supply orders, and machine maintenance.
There are two types of service agreements. The first is an agreement that combines your lease and service into one bill (our company refers to them as “Smart Copy Agreements”). This is helpful if you are not interested in receiving more than one bill per month, especially if you have multiple locations.
Major and national companies who have 10+ locations may find it a headache to receive an individual service agreement for each location that houses a machine.
The challenge here is that you could be stuck with a minimum payment if you break the contract because you have additional lease payments to make. Remember, the leasing company wants their money for the equipment. A $200 per month lease payment could become hundreds more if service is lumped into it and you still have lease payments to make.
If you are trying to get out of a copier service agreement, this type of contract poses the most problems for you; however, it is a good option if you are happy with your provider and want to make things easier for your administration department.
The second type of contract is one that includes a Fair Market Value (FMV) Lease, with your service agreement being a separate contract and bill. This contract is much easier to cancel because the service agreement is not bundled with the lease agreement.
It does add the hassle of paying multiple bills, but the flexibility may be worth it if you are a single site business. You will still have to finish your payments on the equipment, but it frees you up to make a service provider switch.
Most contracts (provided by any business) are long and stale to read. They are designed to cover as many scenarios as possible to protect both parties, but more times than not, they are designed to protect the party issuing the contract. Here are some things to look for when you are reviewing your Service Level Agreement:
Automatic Renewals – a clause regarding automatic renewals will most likely be written into your agreement. This protects the service provider from losing someone’s business at the drop of a hat. Traditionally, you (the customer) are required to provide a Letter of Intent to terminate service 30-90 days prior to the end of your agreement.
If you fail to provide this Letter of Intent, the contract can auto-renew, and most contracts renew for an additional 12 months. Make sure you understand the cancellation procedure even if your agreement is about to expire.
Breach of Contract – it is possible to break a service contract, but like most contracts, it is difficult. Contracts protect the customer and the provider. The only way you can get out of a service contract is with gross negligence on the part of the provider. This doesn’t mean their service is slow or that the machine breaks down too often.
Gross negligence would have to be more extreme, like the provider not maintaining the equipment at all and never coming out to fix your machine. Make sure you understand how often your copier should be serviced and know if your agreement is appropriate for your equipment; otherwise, you may expose yourself to extended downtime, without any recourse.
Keep in mind that a quality service provider will do what they can to keep your business and build brand trust, even if that ultimately means objectively admitting their faults and allowing you out of your service agreement.
Early Termination Fee – many copier dealers and manufacturers will place penalties in their contracts for terminating early or breaching their policies regarding the termination process. Some only administer penalties if you breach their Letter of Intent policies, and others will hold you to finishing your entire agreement, even if you switch providers.
Before getting into a long contract with a copier company, make sure you know if they have early-cancellation penalties built into their contract.
What is a Copier Lease Buyout?
Often, there are scenarios where a competing dealer will agree to “buyout” your lease in an effort to earn your business. In this situation, the competing dealer will roll the cost of your remaining lease into their new lease. This allows them to recoup the money spent in paying-off your old equipment.
So, are you really getting a buyout? Not really. This is more like refinancing your existing equipment by spreading your remaining lease payments over the next 36-60 months while affording yourself the freedom to upgrade your existing copiers, today. Every dealer and manufacturer does this, so you can be sure this is not a proprietary secret.
It drives me crazy when I see cable companies promoting their “Super Deluxe Premium Channels Package” for a mere $80 per month (with internet included!). I know that in 12 months, my monthly rate will almost double. A friend who worked for the cable industry explained the reasoning behind this and I realized that this is the exact same reason copier service agreements do this, as well.
When you sign a service agreement with a new dealer and the agreement comes with brand new equipment, there isn’t a need for a higher cost service contract. But it isn’t a gimmick. Copier dealers don’t need to charge you as much the first year.
As the machine gets used, the parts inside begin to wear down and need to be replaced. Simply put – as machines get older, machines need more. It’s like the difference between the medical bills of an 80-year-old and a 14-year-old.
As machine parts wear, copier service technicians will begin using Preventative Maintenance (PM) kits to keep the machines in top working condition.
If they didn’t raise the price over time they would be working for free (which sounds nice until they go out of business and you no longer get service). So, the real question should be: “Why isn’t my cost going up?” If you are in a contract with a stagnant price, one of two things is happening:
- They aren’t servicing your machines regularly, which will result in extended downtime.
- They are taking a loss on the service of your equipment.
The Bottom Line and a Misunderstanding
If you are determined to break ties with your current copier service provider, rest assure there is a way to do so, provided you have reason to believe they have breached the terms of your contract.
Be wary of some of the advice you read on the internet, though (yes, I see the irony), as some promote the idea of paying off the balance of your copier lease early, advertised as a solution to get out of your copier lease. Yes, you’ll get out of your lease, but only because you will own the copier or will have met your obligation to the leasing company.
But unless you hate the machine, this doesn’t solve your problem. Most people who search ways to get out of their copier lease no longer have a machine that meets their company needs or are upset about the service provided by their dealer or manufacturer
Paying off your copier will not change poor service, and you can often find a new company that can buyout your contract or possibly service the equipment you already own. When it comes to copier leases and service agreements, price differences are minimal when compared to each other. At the end of the day, is saving $50 per month on service worth the headache of poor quality?
"The bitterness of poor quality remains long after the sweetness of low price is forgotten."-Benjamin Franklin
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Posted by Daniel Gray
Daniel has a passion for educating and helping people and has spent over a decade in the education and office technology industries. He has a Bachelor's in Education from the University of West Georgia and an MBA from the University of Georgia. Daniel has been the lead writer at SOS since 2017 and specializes in managed IT services, copiers and printers, and business phone systems. He lives in Atlanta and has a goofy greyhound named Ticker.