The top 5 equipment-leasing ‘gotchas’ to avoid — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

The top 5 equipment-leasing ‘gotchas’ to avoid

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If your company is among the 80 percent of U.S. businesses that lease office equipment and furniture rather than buy it, you already know the benefits of leasing. But do you know the hidden pitfalls that can drive up your leasing costs?

If you can sidestep the “gotchas,” you can trim 5 percent to 15 percent off your costs. Mary Redmond, president of Independent Lease Review Inc., points to these top five:

1. Assuming you have no room to negotiate. “When you see the words ‘Standard Equipment Lease,’ that’s just the name of the document,” Redmond says. The word ‘standard’ doesn’t mean ‘no changes allowed.’ If the vendor won’t negotiate on price, negotiate on supplies, maintenance or training.

2. Relying on only one pair of eyes. Go to friends, experts and other small business owners to ask for insight.

3. Haggling over monthly payments. Focus on the best price for the equipment, not the monthly payment. When you buy a new car, it’s the same principle: Whittle a $36,000 sticker price down to $32,000, and your monthly payments drop.

4. Accepting a murky buy-out policy. The sales rep says you can buy the equipment at the end of the lease for “about 10 percent,” but the lease states “fair market value.” The difference can be significant. Ask what the buy-out terms mean, then change the lease language to something clearer. (Example: Fair market value, not to exceed X percent of the original price.)

5. Becoming handcuffed to the lease. Beware of terms that extend the lease automatically, without your approval.

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