When it comes to leasing equipment, understanding what it can do for your business is only part of the equation. Understanding and choosing the best lease for your business is another matter altogether. The market is primed for the use of equipment leasing to expand, grow and hone a businesses assets, but at the same time there is little material out there to help a business judge what’s a good lease and what isn’t.
What You See Is What You Get
There is an old truism that says you get what you pay for. When it comes to equipment leasing, you want a lease that clearly defines your responsibilities versus the lessor’s responsibilities. You really want it to be what you see is what you get. So how do you go about choosing the best type of lease for your business?
Shop the options is the best way to get started. If you know what type of equipment you need, then comparison-shop the options with different companies. Some key figures to make sure are included in any lease option are:
• Cost Per Month
• Maintenance Contract
• Cost of Maintenance Contract
• Training Available
• Customer Service
• Availability for Software and Hardware Support
• Obsolescence Upgrades
• Term of Contract
• Renewal Terms
When it comes to long-term leases, it’s better to set the terms from the outset to deliver the best possible results to the company overhead. When it comes to maintenance, many leasing companies package that as a separate component. If a piece of equipment fails altogether, it’s likely the leasing company will replace it. But what if the piece of equipment goes down? Will there be a 2-hour, 4-hour or 24-hour response time to getting a service technician on-site and the equipment back into operation?
This information is critical because when a piece of equipment is operable, it’s just a piece of junk taking up room and preventing the business from operating normally. Upgraded maintenance contracts will have to be negotiated. But there’s also the concern about what happens when a newer, better model of equipment becomes available? Does the lease terms support an upgrade to this model of equipment or will it require waiting until the contract is up for renewal?
Beware Hidden Costs
By getting the information up front, a business can avoid hidden expenses. They can plan budgetary requirements and potentially for long-term leases, bring up training requirements for their staff. This is another concern that some companies don’t consider when negotiating a lease. Will the operator of the equipment receive training from the leasing corporation? Do they have representatives that understand the operation of the equipment and provide certified instruction? If not, how is that handled?
While this will not be a concern for every piece of equipment leased, for those businesses that require certified training it’s good to know if it will be available. Also in the case of leasing computer equipment, how is software licensing handled? Is packaged into the hardware lease or do those licenses need to be obtained separately?
Finally, understanding the renewal terms can help circumvent a rise in cost for renewing an equipment lease. Some contracts will allow locking a price for a period of five years. The lease may only last two years, but at the renewal point the cost is locked in for that particular piece of equipment. When it comes to a long-term budgetary forecast, every piece of information can help.
Clearly defining what an individual contract delivers from a leasing company can provide a business with the opportunity to comparison shop. By comparing the different options, price levels and services from one leasing company to the next, a business will be choosing the best equipment lease for their business.
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