It’s easy to get into a lease contract, but getting out of one can be complicated for various reasons. In this post we discuss how to break a copier lease and 5 different ways it can be done.
This is the standard industry solution for getting you out of your current machine. The balance owing on your current lease is added to cost of the new lease you’re signing, and then spread out over the length of the new lease term. The amount of refinancing baggage you’re rolling over into your new contract is called “air” in industry speak.
For example, if you have $5000 remaining on your contract and your new machine is worth $10,000, your new contract will be worth $15,000 and be carrying 33% “air”.
This option only makes sense if you’re also on the market for a replacement machine. Also, if your contract has a lot of air, it basically means you’re paying for two machines at once while only using one! Companies deal with this scenario is by offering you a discount to account for the “air” being rolled into your new contract, however unless the discount exceeds the value of the air, your payment will increase.
2. Lease take-over or transfer
Lease transfers are both legal and possible. There are fees involved in the transfer that vary according to the type of lease being transferred and the service and relocation resources required. However, these costs are small compared to the costs recovered by being rid of the commitment.
The main problem is finding someone to take over your lease. The good news is that there is a thriving secondary market for photocopiers, so your buyer is likely out there. All you need to do is to get their attention by giving them a discount incentive. At the end of the day, even if you eat 10% of your lease commitment and spend another 10% on transfer admin fees, you’re still recovering 80% of that cost.
Some businesses have turned to craigslist or kijiji to list their leases for take-over, but their “buyers” are not there—people typically use those sites for one-time anonymous transactions, not for big-ticket items where credit approval is required. Un-Lease.com wants to connect the supply of idle assets out there to the unmet demand of secondary market customers looking for a deal.
3. Paying out the balance
If you can afford to, you can end your lease commitment by paying out the full balance all at once. When you pay the balance you fulfill the conditions of your lease agreement and are able to walk away. However, this is not an option for most small businesses that might have cash flow constraints.
4. Waiting for the lease to expire
Another way to fulfill the conditions of the lease is to suck it up and continue paying for it until the expiry date. This is often the only choice for businesses that don’t want to refinance their way into a new agreement.
If you stop making payments, the vendor will definitely come and take your machine away. However, unless you file for bankruptcy you’re still responsible for your lease payments. Don’t even consider this a viable option—bankruptcy will stay on your record and make it impossible to get credit for at least six years.
If you have any further questions, please contact us.How to break a copier lease: You have 5 options by Rob Mackenzie