Dirty MFP Leases, Done Dirt Cheap!

Who owns the customer when an Office Equipment Dealer or Direct Branch introduces a third party vendor (Leasing Company) for the financing of the MFP System? 

This question has been asked over and over in our industry.  Here's paragraph from Frank G. Cannata that is posted on Great America Leasing Corp's web site.

"The leasing companies who provide these "low rates" have to inflate the residuals in order to make it work. With the transition from analog to digital, it became painfully obvious that the residual values on the leased inventory were inordinately high and totally unsupportable.



The problem arises at the end of the lease when the dealer elects to go with another leasing provider. That is when the fun begins. It starts with fuzzy or vague end-of-lease requirements. The term "evergreen" is used when the customer has passed the period that allows him or her to terminate the lease. They often are extended without the consent or even knowledge of the customer. But that is only half of the story."

Frank also mentions the evergreen clause and also comments on how dealers try to maneuver around some of the end of lease terms to help the customer.  All of this has been going on for years, it's nothing new to us in the business. 

What's new? The first time I saw it was from Wells Fargo (if you know me you know how I feel about them, making a church make 12 extra payments on a lease because the church notified them a month earlier than what the lease contract called for), after the customer requested to return (customer sent Letter of Intent) the system, WF would then contact the customer and offer the customer to buy the unit from them, plus they would finance it!  Basically, cutting out the dealer and offering a lower buy price to the customer than what may have been offered to the Dealer or Direct Branch.  For all intentions Wells Fargo was now in the business of selling "off lease" copiers to the end user or the Dealers/Direct customer.

Now, just the other day I received a "ship to" location to return a Ricoh device to CIT.  Low and behold at the bottom of the page CIT had a quote for the customer to keep (buy) the unit, along with that they were willing to refinance the unit.  I'm guessing that CIT is now in the business of selling "off lease" copiers also.

My beef is that in all of these deals, the Dealer or Branch brought the leasing company to the party. If it were not for the Dealer/Direct Branch the leasing company would have never had the opportunity to engage with the customer. Is nothing sacred anymore?  Personally with this kind of end of lease behavior I couldn't give a rats ass about  either CIT or Wells Fargo and what happens with their device.  It's our (Dealer/Direct) customer and if you want them back then give the dealer incentives to keep the old unit instead of massing hundreds of thousands of old copiers in copier bone yards that are scattered across the country.

On the other hand there are those that say that Dealers and Direct Branches made their own bed by engaging Leasing Companies that had the lowest rate factor and the highest return on the copier. That's a good point, and you get what you pay for.  All Leasing companies are not created equal, some are very good like Great America and Clune Leasing, some are learning by their mistake and making changes, and some are still out their to enforce their contracts to make headaches for everyone.

Dealers/Direct need to take a more long term approach with who they make their bed with and those who lease need to read the fine print before they sign on the bottom line!

-=Good Selling=-