Thursday, January 3, 2008
MFP Leasing Companies Crying About Portfolio's
I was going to do a little work on some quotes tonight, and then I received an email from a leasing company. Many leasing companies are not accepting applications for equipment from Mortgage Brokers, Real Estate Agents, Title Insurance Companies, & Residential Construction Companies.
Here's my take on this, we the Dealers did not force you to take these types of business, you looked at their credit, and approved them for financing. We as Dealers have been loyal by giving you all of the applications whether the good, bad or ugly. You the leasing company then picks what you want and what you don't want. Now, you the leasing company tells us you need to cream our applications only to take the markets that are performing well. To turn it around it would be like us sending ABC leasing company all of the marginal deals and sending the best deals to XYZ leasing company, ABC company would be offended and would tell us that they would no longer do business with us. So, why can't we tell them to take a hike, NOW you get zero applications from us and we will take our portfolio to someone who will take all of the applications! Hey, you made your own bed, so now lay in it and work it out.
It's leasing companies and many banks that are flaming the market! If this continues it will only make things worse for the economy not better.
If you are using any leasing company who has done this, I urge you to pull your whole portfolio, there are many other seconday leasing companies around who would love to have our business! yes, the rates will be higher, but think about this..... it seems the average 60 month FMV rate is now .0196 or $19.60 per thousand, compared to $1.00 out average rate of .0217 or $21.70 per thousand, the difference is $2.10 per thousand. So a $10,000 copier on a dollar out lease would only cost the customer $21.10 more per month or $1,266 over 60 months. What favor are they really doing us with FMV, we struggle to upgrade, struggle to return, pay shipping to return, struggle to inventory, struggle to make sure system is returned on time!
If we, are truly good sales people, we should always sell 10% or $1.00. Plus if you are that good, it would be easy to cost justify the customer even if they owned the copier at the end of the lease! Dealers must see the light at the end of tunnel instead of realizing profit NOW, is really no profit at all when we spend hours struggle to return systems.
Here's a statement from one leasing companies web site: At ABC Leasing we like being "unconventional" because finding ways to get things done is a lot more fun than accepting the "way things are." Seems to me that they are like everyone else!
I know of one leasing company that has a rate of .0203 for $1.00 out and rates for 10% are comparable to FMV. I making the switch as of today and will no longer be held hostage by the these leasing companies.