Death of "The 60 Month Copier/MFP Lease"

As we still struggle to keep margins on equipment, maybe we need to become better advocates of presenting shorter terms for leasing equipment.  Since I've been tracking all of my sales for purchase and leases, 92% of them involve leasing the equipment with a third party leasing provider.  Of that 92%, 89% percent of the leases I've written is for 60 months.  I would tend to think that give or take a few percent this would be applicable most of us.

60 months or 5 years is a long time, right?  Dang, I'm tired of my cell phone after two years and my car in about three. Technology changes so quickly nowadays that I want the latest and greatest new car features whether it's better gas mileage, more comfort, or new technology. The same is true of my cell phone, after only two years I would like to step up to new technology that may enhance my life style of make me more productive.  Wouldn't our customers want the latest technology with their copiers and MFP's also?

Why are we not quoting selling more 24 or 36 month leases?  

Look at it this way, if you put a customer into a 60 month lease, you'll have to wait at least four years until you or the customer has an upgrade path and 54 months would be the prime time to upgrade.  Even at 4 years the upgrade path may not be the rosey of a picture for your customer.  Putting your customer into a 36 month lease means that the upgrade path is now reduced to two years and 30 months would be the prime time to upgrade.

A lot can happen when you have to wait

Office Equipment Leasing "Who's Stealing the Cheese"

Ethical or Unethical?

Some companies use em and some don't. For those of you who are new to the business, I'll try to make some sense of the "padded" lease rates. "Padding" means to increase the lease rate factor from what the leasing companies published rate is. Meaning, the leasing company will provide the Direct Branch or Dealer with a rate factor of .0276 for a 36 month fair market value lease, thus a $10,000 piece of equipment would cost $276.00 per month to lease. Dollar amount times rate factor equals cost per month.

Now, here comes the sneaky part (geez, I hope I do not get phone calls from attorneys with pointy sticks!). The Direct Branch or Dealer will raise the rates to the reps, such as the rate going from .0276 (36 month FMV) to .0289 (36 month FMV), thus a $10,000 piece of equipment will now cost the customer $289.00 per month. The Direct Branch or the Dealer will then "back out" the rate. Meaning,  take the payment and divide by the real rate factor (.0276) which will then equal the total dollar amount that is paid to the dealer by the leasing company. In this case the dealer would receive $10,471.01 or an increased revenue of $471.01 by "padding" the rate! In some instances