Leasing Tips

Recently it came to my attention that CIT Financial has different rates for fax machines and laser printers. The rates for these types of units are higher than the MFP rates for multi-functional devices. I would guess that the reasoning is that CIT was not able to get a good return for these units once they came off v clease.

However this new lease structure has raised a few questions:

1. What happens when you have a combination of equipment, MFP's Faxes and Laser Printers? Are they going to blend the rate or do all of it at the MFP FMV rate?

2. When using the higher rate, will we (the dealer) get a better offer to buy the equipment?

What I find most unsettling is the leasing companies unwillingness to budge from their buy-out or upgrade rates, I would tend to think that most dealers would buy the equipment if they were using a "TRUE" fair market value.

Zero Interest Financing

A few months ago I called one of the leasing companies that we do business with and asked him to device an end of the year special for us. What I wanted was a 60 Month Zero Percent Finance with a $1.00 Purchase Option. The leasing companies will then get out their "bean counters" and give you a rate or a deduction off the invoice to meet your requirements. To my surprise the leasing company (USXL) reneged and said that they would not offer this type of program!

Ok, so I have to do it my self. Here's what I did, I presented a proposal for list price and then divided it by 60 payments. So, for a 60 month lease on $15,000 the customer would have to pay $250 per month. Then I backed out the rate for the dollar out payment, the equation is payment divided by rate factor equals money to dealer. In this case the dealer would receive $11,520.73 and $3,479.63 went to the leasing company (not a bad cut for them). Then I had to figure the cost of the machine and if I thought the GP was sufficient for the deal. It was, so I presented the offer and the deal sold.

There are many buyers out there who will only buy and never lease, the problem I was found with these customers is they tend to hold onto old technology too long and it's like pulling teeth to get them to upgrade, this scenario pulls at their purse strings and gets them the best of two worlds, they own the equipment at the and they are not paying the interest (actually the dealer is). Plus at the end of the term they may be more likely to do the same deal again.

Good Selling To All!