When you decide to enter into a color copier lease one of the biggest questions you’ll face is the length of the lease term. For whatever reason, over 90% of every business copier lease is written as either a 36 month lease or a 60 month lease though there are other terms available. There is no specific reason why the industry seems to have standardized on these two term lengths but statistically speaking, these are the two terms you’ll be offered by most copier providers.
If you’re like most people, the first reaction is to minimize the length of time that you’re “locked in” to a copier lease and based on this initial reaction, you may well lean towards the shorter 36 month lease term….not so fast, however. There is a strong argument, one that this author favors, that the short term lease is favorable for the company that’s leasing you the color copy system, but the longer term lease is almost always favorable for the company that’s leasing the copier. Why is that you ask?
Whenever you enter into a copier lease you are basically spreading the resale cost of the leased copier over the number of months in the lease along with a modest finance rate that the lease company charges in exchange for financing your copier over the term of the lease. For example, a 5,000.00 copier on a traditional 36 month lease would typically come along with a monthly payment of approximately $145.00 – $150.00 a month. In comparison, a $5,000.00 copier on a 60 month lease would typically come along with a monthly payment of approximately $95.00 – $100.00 a month. The two things that are important to keep in mind are that with 90% of every copier lease agreement, you don’t own the copier at the end and approximately 90% of all companies enter into a new lease agreement at the conclusion of the lease term regardless of the original length in term. What does this mean? I’m glad you asked…
Since we know that regardless of which copier lease term is selected, statistically, you’re almost certainly going to enter into a new lease agreement at the end of term, this means you will continuously be making either a higher $145.00 – $150.00 payment on a 36 month term or you’ll be continuously making a lower $95.00 – $100.00 a month payment on a 60 month term. An important note is that if you purchased a copier instead of leased it, you would depreciate the copier asset over 60 months. In fact, 60 months is the absolute minimum amount of time that a copier should perform at the highest level and the author strongly suggests that any copier you lease should perform at or near peak levels for a minimum of 5 years. Why then, would any company choose a 50% higher payment for a shorter 36 month term when they know that the copier they’re leasing will perform well for the longer 60 month term? The author of this blog suggests the main reason is that the copier companies that earn a living leasing copiers, prefer customers choose the shorter term because at the end of the term, 90% of their customers will lease another machine. Obviously, it’s in the copier company’s best interests to lease their customers a new copier every three years compared to every five years. Copier companies are aware that most of their customer’s natural inclination is to lean towards the shorter term, and because it serves the copier company’s best interests, they simply nod and agree with their client’s choice to select the shorter 36 month term.
Let’s summarize; In the event you choose to enter into a color copier lease, statistically speaking you will almost certainly enter into either a 36 month term or a 60 month term. Also, statistically speaking, you will almost certainly upgrade to a new color copier lease at the conclusion of the original term regardless if that term was 36 or 60 months. When we consider this probability, we basically come down to the understanding that if we choose to lease a color copy system, we will continue to have an ongoing monthly lease payment. In the author’s opinion, it just doesn’t make sense to select an ongoing payment that is 50% higher than necessary simply to have a shorter term lease when we know that the copier being leased will easily perform above and beyond the term of the lease agreement regardless of which term you select. In effect, if you choose a 36 month lease instead of a 60 month lease, you are quite simply choosing a higher monthly payment than necessary in order to get a new machine more frequently than you have to. Take heart though, as the statistics show, almost every company that leases a color copier gladly chooses to enter into another lease at the conclusion of their term meaning they are satisfied with the exchange of a quality color copier for a reasonable monthly fee. It’s simply a matter of choice as to whether you choose to spend more each month in exchange for a shorter term.
For more detailed information, please click the link below to download the free Lease vs. Purchasing Guide written by the author of this blog.