One of the most common questions we receive from our soon to be onboarded new clients is, “How do I terminate my old copier lease?” and cut ties with the previous company.
While it would be nice to simply stop paying them and move on to your next engagement, that’s not something we would ever recommend. There is a process you should follow to reduce the costs in cutting ties with the current vendor. Like any other lease or loan, you have with a bank, it’s important to let them know of your intentions to stop the relationship.
In some cases, you won’t be able to get out of your lease until the contract terms are completed. In other cases, you may be able to upgrade your lease with another provider.
A good Account Executive can help you understand your specific situation by reviewing the current agreements you have and weighing it with upgrade options available. There are three key documents you will need to get an accurate upgrade option from an account manager. You will need your original lease agreement, your service agreement, and your most recent invoices that show the usage numbers on your current device(s).
Let’s Start With “The Original” Lease Agreement
It’s important to help the Account Executive understand your current situation by providing them with the agreement that you initially signed for the copier or printer. This contract is known as your Copier Lease Agreement but can also be called a page management agreement, or a rental agreement even if it is a lease itself.
This agreement is between your company and the leasing company. Sometimes these can be white labeled to look like the agreement is between you and the copier vendor that sold you the equipment and services it but that is very rare they carry the note on your equipment. A lease agreement will most of the time hold up in court, so you’ll want to pay attention to the details.
It’s important that you read the fine print of your Copier Lease Agreement to be sure that:
- There are no hidden costs.
- There are no long term (12 month) auto renewal terms at the end of the agreement.
- There are no escalation terms in your payments.
- You understand what portion of the “lease” payment is actually for the equipment and if service is bundled in you know that portion of the payment as well.
Why have a Copier Lease Agreement?
Leasing a copier can help reduce the outlay of cash for the organization allowing you to make smaller monthly payments and utilize the cash for other necessities in the business. It also allows you to keep a refresh schedule on the ever changing technology in the print industry rather than being tied to the asset with ownership. Most copier leases are:
Fair Market Value (FMV) Copier Leases
This is a flexible financing solution that enables your business to have access to the devices for a set number of months. At the end of the term, the leasing company takes back the device and your business is free to upgrade your copiers and printers for the most recent technology. The FMV lease is the most cost effective way to make monthly payments on your equipment.
$1 Buyout Copier Lease
This lease type is very similar in that you make payments toward the lease amount for a set number of months. At the end of that term, your business has the option of buying out the device for $1. Think of this as a bit like rent-to-own for your copiers and printers, as it’s a great way to own the device if you aren’t financially able to buy it or make larger payments early on.
What’s the difference between the lease and the service agreement?
That’s a great question. While the copier lease typically covers the financing of the copier, printer or plotter, the service agreement generally covers the maintenance of your devices and can be held with the dealership that sold you the device or with the manufacturer. You are also able to obtain a service agreement with a dealership separate from the one where you purchased your device, depending again, on the agreement.
Service agreements are a good thing to have because they ensure that your devices are running smoothly, which maximizes your uptime, and usually help keep your devices full of toner.
The service agreement covers things like service calls you may need for normal issues with the device. It may also cover remote assistance, auto ordering of your toner and ink (if you are on a networked device) and general preventative maintenance. Most service agreements do not cover paper or staples in their terms.
You’ll want to keep an eye out for things like automatic renewals, breach of contract, and early termination clauses.
What Does a Copier Lease Termination Letter Look Like?
If you are looking to cancel your lease, you’ll need to provide a written letter to the leasing company. You can follow the example here:
Be Aware of Early Termination Clauses
In many cases, your current company may charge you and early termination fee, so it’s important to read the lease terms carefully and compare them. If you have a legal department, now is the time to incorporate them into the conversation.
If there’s anything you don’t understand, ask your soon to be new account representative to help you through the process. If you are simply upgrading your copiers and printers, and with your current copier vendor, then typically they will manage the lease changes for you.
If there are payment changes, extension terms or surcharges, these are red flags…watch out and get clarification.