COPIER LEASE BUYOUT | 10 MIN READ
Are you interested in the idea of switching to a new copier service provider but don't know how to break your contract? That's where a copier lease buyout comes in. As a metro-Atlanta based copier dealer, our mission is to simplify office technology decision-making through consumer education. So, what is a copier lease buyout, or more importantly, how does one work? Keep reading to find out.
[Quick Summary] A copier lease buyout is a one-time payment that you make if you don't like your provider and want to break your contract but it hasn't ended yet. Your provider sets the price based on factors such as how many payments are left and the machine's residual value.
For more information, keep reading!
The Difference Between a Copier Lease and Copier Service Agreement
We wrote about the difference between a copier lease and copier service agreement in more detail within our blog: How Do I Get Out of My Copier Lease? If you want to read more about it, I would begin there, but we'll briefly go over it now.
A copier lease is a binding contract you have with a leasing company or other financial institution which holds you to the payments of your copier equipment for as long as you have the machine.
Now, that doesn't mean you can simply get rid of your machine and magically the payments disappear. A lease program allows you to make payments on the machine toward the eventual goal of owning it or until you'd like to trade it in for a newer model (very similar to a car lease).
Also like a car lease, you can choose to purchase your copier at any point before the lease expires or at the end of your leasing period. Either decision should be based on your company goals and values.
If one of your company values is to ensure that it is remaining current on the latest technology, then trading in your copier for a newer model is probably the right choice. If your company is trying to save money and doesn't need a more current model, then you may be able to accomplish that by owning (or even purchasing a used copier).
A Copier Service Agreement, is a contract you enter in with a service provider. This is the agreement of the services that will be provided and the price at which they will be provided to the customer.
Most service agreements are able to be canceled with 30-days written notice, but it is the copier lease that hinders some companies from being able to easily switch. Copier leases are not able to be canceled after being signed. Think back to the car analogy.
Imagine walking into your bank and saying:
"I've decided I no longer like my car and won't be using it, so I'm not going to pay you anymore."
They would laugh at you (OK, maybe not if they're professional) and say, "tough luck." If you stopped paying, they would repossess the car and you'd take a big hit on your credit score.
So what can be done if you don't like your provider, but still have to make payments on a machine they leased you?
That's where copier lease buyouts come into play...
What Happens During a Copier Lease Buyout?
So, we know that you can't terminate your lease agreement, but what about the service contract?
As it turns out, most companies will let you get out of a service contract with 30 days notice. But if that's the case, then why is it so challenging for some to cut the cord with their provider?
The main reason is because of the copier lease, and that's where buying out your contract may come into play. It's common practice for copier dealers to "buyout" a copier lease to earn your business. The standard length left on a contract that can be bought out is 23 months or less. That means if you have three years left on your contract, it isn't likely you will find a company willing to take on the headache and expense.
That is, unless that company services the same brand of equipment. It's easier for them to buyout the lease contract of a machine they already sell because they don't have to replace the equipment. In cases where you do want new equipment, providers selling the same brand may agree to purchase the equipment from you and resell it.
But the real answer to how a buyout works is in the next section?
How Can Dealers Afford to Buyout Copiers?
The simple answer - they don't really buyout your copier lease. Not really.
Your remaining payments get rolled into the lease on the new contract, and all copier dealers do this. So, a buyout is a bit of a misleading phrase.
It's important to note that 90% of our customers choose to have a copier lease (rather than purchase outright) because it only costs them about 80% of the machine by the lease's end date and allows them to upgrade to a more current and efficient model.
Still, it isn't a true buyout, but it does make it affordable for you to switch providers before your contract expires.
So, is it possible to get out of your copier lease or service agreement? Yes! Provided they are separate.
But what if they aren't separate?
Sometimes, companies will offer a lease and service bundle into one bill. This is convenient to the buyer (especially if you are a company with more than one location) because you don't have to keep up with multiple bills. But it also makes it more challenging to get out of your service agreement if you're unhappy with that service.
Why is that? Because even though it is relatively easy to cancel a service contract, it's impossible to cancel a lease on a machine before its end date. As a result, if you still have payments to the machine remaining, the bundled option will also have service attached to those same payments.
If a dealer wants to buyout your contract as a way of earning your business, this type of contract makes that more challenging, and at times, cost prohibitive. There are a couple of things you should be sure of if you are hoping to find a dealer who will buyout your contract:
- Do they service/sell the same brand of copier you currently use?
- Are you within 23 months remaining on your contract/lease?
- Are your lease and service contracts separate?
If you can say 'yes' to at least two of these questions, then your chances are higher that a dealer will be in a position to buyout your contract.
If you still aren't sure, feel free to reach out to us by clicking the button below and we will answer any questions you have about your service or lease contracts.
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Posted by Bernie Schom
Bernie Schom is the Vice President of Sales at Standard Office Systems and has been in the copier and printer industry for over three decades.