Information regarding the leasing of multi-function copiers printers and industrial label presses.
There are a few advantages to leasing a copier as to buying one outright. The first important one is that you don’t have to pay the whole price of the machine upfront. A new multi-function copier could cost $3000.00 upwards to $35,000.00 depending upon what you get. Leasing gives you a low monthly payment, zero down and zero down at signing. At the end of a lease a company has plenty of choices compared to if they had just bought the machine. At the end of a lease a company can replace the existing copier and upgrade to the newest model and they can do this every 3 to 5 years depending on how long the lease is. A company that leases never has to worry about falling behind in technology. That is important because computers are always upgraded but someone who hangs on to a copier because they bought it outright will never be able to upgrade their copier as easily as a lease.
If the lease was $80.00 a month, the leasing company would attach the sales tax on top of the $80.00. If you are a non profit, the leasing company would need to obtain a copy of your 501c.
Yes, you will need insurance on the machine. The leasing company will provide you the insurance, or you can go through another company to provide the proof. Depending on the price of the equipment, the monthly insurance cost could roughly run between $10 to $25.00.
Yes we have a five year or 60 month lease. Our maximum lease is 63 months and the minimum is a two year or 24 month lease.
At the end of a equipment lease, you can do one of three things: 1) Return the equipment and lease a newer model, 2) Return the equipment and walk away or 3) Purchase the equipment. Whatever you decide to do, it is important to know what to expect when you bring the equipment in.
Most people are more familiar with leasing a car. A copier or a label machine is just like leasing a car. You are asking a company if you can borrow their equipment i.e. a car, copier, or label maker. So instead of looking at someone’s personal credit with a car, a credit check of that company would have to be made for a copier or a label machine. So the answer to the question would be yes, a credit check is made for the potential company wanting to lease equipment.
A Fair Market Value Buyout allows the customer to utilize the equipment for a designated number of months with end of lease options to continue to lease the equipment, return the equipment and upgrade to new equipment, or purchase the equipment at the then determined fair market value price of the equipment. A FMV lease also is known as an operating lease.
The $1 buyout lease is a lease where the company (the borrower) makes payments on a piece of equipment, and at the end of that lease term, “buys” the equipment for $1. For a $1 buyout, the payments and term reflect – almost dollar for dollar – a finance loan of similar length (otherwise, buying it out for a single dollar wouldn’t make sense.)
In basic terms, a $1 buyout lease IS just like a loan, save for the technical classification of ownership. While lease payments are being made, the lessee (the borrower) doesn’t technically own the equipment – but if treated as a bargain purchase option lease – it does show up as an asset on the balance sheet. This may not make your accountant happy, so the better way to go is with a lease that doesn’t have a bargain purchase option (i.e. FMV) as each lease payment can be expensed 100% (as opposed to slow ownership depreciation), and the equipment won’t throw the balance sheet out of whack either.
But leaving the “accounting details while payments are being made” aside, the company is solid about wanting the equipment at the end of the lease. So the $1 buyout lease is structured so the bulk of the equipment’s cost is paid during the lease term, with that final $1 getting it over the hump to actual ownership.
A lease is a contract arrangement calling for the user (lessee) to pay the owner (lessor) for use of an asset, in this instance, a copier or label press. Broadly put, a lease agreement is a contract between two parties, the lessor and the lessee. The lessor is the legal owner of the asset; the lessee obtains the right to use the asset in return for regular rental payments.
Leasing conserves on capital which is very important for companies that may need that capital to grow other parts of their business. Leasing is also an additional source of credit for present and future needs. Leasing allows for 100% financing, no down payment, no deposits and no required compensating balances. All costs can be financed from installation, service, shipping, maintenance contracts and training. All cost can be included in one monthly payment. Leasing also provides tax advantages, depending on the structure of the lease, you may be able to write off the entire monthly payment as an operating expense or capitalize the outlay. The interest portion on a finance lease is tax deductible.
Leasing improves a companies budget stability. When you lease, you have a fixed amount for the term of the lease, which makes it easier for a business to forecast expenses. This also allows a business to obtain equipment for unplanned events since their operating budget (verses capital budget) can accommodate a monthly payment.
Leasing also helps to avoid technological obsolescence. It protects you from being locked into owning equipment that may not meet your future needs. It gives you great flexibility to upgrade easily to the newest releases, features and functionality as soon as they become available. Leasing is also to your advantage at the end of the lease in that you have more options then in just owning the equipment. Your options include outright purchase of the equipment, you can refinance, upgrade or walk away at the end of the lease.
The reason there are different lease terms is because the payments go down with longer terms, and for some businesses, that might mean they could afford the payment better. A longer lease also means that the business will always have that fixed cost set aside for that part of the business. Shorter lease terms have higher payments, say a 3 year lease, but the advantage to this is the fees and interest would be less plus the added benefit of upgrading to the latest technology faster.