A leasing question (photocopier)

Freebie_Manor

Hello I used to manage a contract for over 100 photocopiers and have the grey hairs and dent in my forhead to prove it. There are some good companies out there who provide excellent equipment and support (when they inevitably breakdown). It is standard practice for leases to span 3 or 5 years, and definately buyer beware because the "cost" of the machine is averaged over the lease period so even if you redeem early you are liable for the remaining life costs. You could pay the redemption money from old machine as a lump some thus avoiding interest on it, rather than adding to new agreement. The secret is to have a really good estimate of how much your demand will be. Not easy I know. Use your spend on Paper to work it out. It is often much cheaper per click to use a 3 in 1 photocopier device (black and white with colour functionality - not a full colour copier) such as available on the market now rather than a desk top printer. Pricing is sometimes two part: lease only rental figure with seperate - maintanance contract for the service side and to incl. toner etc. this may or may not be a lump sum incl set no of copies and/or a formal higher cost per click. the later can be better if volume varies per Qtr. I've seen organisations benefit and loose both ways. Becareful of the insurance on this equipment as its usually up to buying organisation -you -to insure it, sometimes to keep premiums lower organisations/charities have a high policy excess which may be higher than value of copier and in the event that leaking roof (or some such) damages copier irreplicably you will need to pay for machine from budget. nb. networking the copier as a printer makes it IT equipment so it may be subject to a different/lower excess than general equipment which is what a freestanding copier is.
Obviously I could bore for Britain on this one such are my scars but I hope this info assists.

Xpert_2

Hi there, I would definately recommend getting a 2nd quote, let me know if you are interested as I work for a company who supply Xerox photoopiers, Printers etc.

CluelessJock

Savvy_Sue wrote: »

No-one else leases a photocopier? Even if you just told me it was perfectly normal and I should accept it, that would help.

Only I don't want to kick up a fuss unnecessarily. I'm nice like that ... possibly too nice ...

Sue,

Hopefully you have the information you need now.

It is certainly normal practice for the industry to operate this way and they will get as much as possible out of you.

They are very slick at getting you to believe you are getting a good deal by comparing what you are currently paying with what they are offering (I am impressed you noticed they add on the existing finance, most don't). It is important to check your current costs against what is available in the market place. This will let you see how competitive the offer is. I think you will find the offer from your current supplier will not seem so attractive. Other suppliers can often buy the existing contract out by playing with the numbers (make no mistake you will still pay).

They use this method to roll over the outstanding finance for the whole of the new term therefore profiting on the initial deal for longer and it helps their retention as it is easier to tie you in to another deal when you are not in the open market. And of course they don't have the same costs servicing your existing machine. A new customer looking for the same machine who is 'in the maket' comparing suppliers will get a hugely more beneficial deal.

You mention doing a lot of A3, you should not be paying any more for an A3 click than an A4.

The actual deal clearly depends on the machine and number of copies you do, but more importantly it depends or your negotiating skills.

It' not easy to advise the right action, but hanging on until the end of the contract will certainly put you in a stronger position. Even telling them you intend to should result in a better offer.

BuyersBuddy

Freebie_Manor wrote: »

Hello I used to manage a contract for over 100 photocopiers and have the grey hairs and dent in my forhead to prove it. There are some good companies out there who provide excellent equipment and support (when they inevitably breakdown). It is standard practice for leases to span 3 or 5 years, and definately buyer beware because the "cost" of the machine is averaged over the lease period so even if you redeem early you are liable for the remaining life costs. You could pay the redemption money from old machine as a lump some thus avoiding interest on it, rather than adding to new agreement. The secret is to have a really good estimate of how much your demand will be. Not easy I know. Use your spend on Paper to work it out. It is often much cheaper per click to use a 3 in 1 photocopier device (black and white with colour functionality - not a full colour copier) such as available on the market now rather than a desk top printer. Pricing is sometimes two part: lease only rental figure with seperate - maintanance contract for the service side and to incl. toner etc. this may or may not be a lump sum incl set no of copies and/or a formal higher cost per click. the later can be better if volume varies per Qtr. I've seen organisations benefit and loose both ways. Becareful of the insurance on this equipment as its usually up to buying organisation -you -to insure it, sometimes to keep premiums lower organisations/charities have a high policy excess which may be higher than value of copier and in the event that leaking roof (or some such) damages copier irreplicably you will need to pay for machine from budget. nb. networking the copier as a printer makes it IT equipment so it may be subject to a different/lower excess than general equipment which is what a freestanding copier is.
Obviously I could bore for Britain on this one such are my scars but I hope this info assists.

It’s standard practice to lease your photcopiers, and spread the capital cost, but there are many factors to consider before you put your signature to a lease document. Over the next few months photocopier specialist Alan Hale will offer some advice on avoiding common pitfalls.

If you think the lease period of your photocopier agreement is irrelevant you could be in for a nasty shock. It is extremely common to be offered a 60 month lease, often with a matching Service Agreement period and it appears more attractive because the quarterly/annual costs seem lower. They won’t be for long. A 60 month lease can lead to a slow suffocation of your budget, equipment quality and future freedom of choice

Medium/large photocopiers are changed on average every 36 months and not every 60 months. That means the next time you change the balance of 24 months is added to the new 60 month period and refinanced. Therefore you have paid 60 months’ leasing company interest for the privilege of keeping the equipment 36 months. Had you leased the equipment over 36 months you would have saved two years’ finance interest.

It gets worse.
After 36 months you now have a situation where the equipment needs changing and instead of being at the end of a 36 month agreement you have 24 months remaining which is added to your new equipment cost and financed again.
This is where the quality of your equipment and its reliability begins to suffer. You now need to replace the equipment over the same term, ideally at the same cost, but with 24 months outstanding on your existing lease which is 40 per cent of the original contract. How can you upgrade all the equipment for the equivalent of 60 per cent of the original lease cost? You can’t.

The supplier then puts a proposal to you that only upgrades some of the machines because otherwise you won’t accept his offer as the costs to replace all would rocket. This means some of your original equipment has to last another 60 months until the second lease expires. This is virtually impossible and now you are on an ever increasing cost and unreliability spiral that becomes very difficult to manage.
This is all because the salesman, who knows the average life of his photocopiers, has taken the line of least resistance with his first agreement by proposing a longer, “cheaper” term. His advice should have been: “Don’t sign a 60 month agreement.” It is worth knowing that salesmen earn commission when they change your lease so they are happy to change it as often as possible. They know you will have to upgrade regardless of the term of your lease and they may also have asked you to sign a service agreement with restrictive terms that compound your problems with settlement penalties.

Below is a comparison based on a £10,000 photocopier replaced every 36 months on three occasions using 36 month leases and another replaced every 36 months but using 60 month leases again three times. Look at the difference and whilst doing so bear in mind that the 60 month lease was supposed to be cheaper.

1.Cost using 36 month leases =£34,200.00
2.Cost using 60 month leases =£42,001.20

So for the privilege of leasing the same equipment over 60 months and not 36 months you put an £8,000 dent in the budget which is nearly the cost of the equipment you first leased. How is 60 months cheaper?

Alan Hale

Horace

I used to work for one of the biggest photocopier dealers in Birmingham - so I know all about copiers and leases etc.

All dealers will charge per copy so if you use A4 paper then you get charged 1p or if you use A3 paper then its 2p (these prices are examples only). If you do a large volume of copying then it may be worth getting something like a scanprinter (Risograph) that copies in colour and you put ink into like like an old gestetner machine only less messy.

You do have to watch the small print on the lease too as you have found that if you redeem the machine early then you become liable for the remaining cost. A copier will work well for the first 12 months but in the second year parts need replacing e.g. drum, corona wire, brushes, lifters and then you find in the 3rd year that these parts arent required.

It pays to shop around and not to be linked to one main dealer - there are lots of dealers out there offering better deals. Might it be worth buying a copier outright and then paying for a maintenance contract on it?

fguk

This discussion might be relevant to someone I guess, but are the recent posters aware that the thread was dead for a year before someone bumped it up?

I would guess SavvySue is sorted by now!

Savvy_Sue

fguk wrote: »

I would guess SavvySue is sorted by now!

As much as I'll ever be ...

Horace

fguk wrote: »

This discussion might be relevant to someone I guess, but are the recent posters aware that the thread was dead for a year before someone bumped it up?

I would guess SavvySue is sorted by now!

No...I never noticed that:o

joffyw

Whilst i know this post has been rumbling on for a while i'd like to add my two penneth if i may.

I run a small photocopier and telecoms company, mainly dealing with Canon and Olivetti machines.

Coming from a technical background, my approach to selling machines is slightly different to most in the game. Getting a lease machine out in the field is great for the supplier, they are paid by the lease company the full amount usually in 2 weeks plus at the end the term they will try to introduce a large figure to buy title of goods to the customer or they'll take the machine away, oh or you can enter another lease of course!

My approach is simple, look around for second user machines. In this current climate there are a lot of machines out there that payments have been defualted on or administrators are getting rid of. As an example, a machine costing over £5k six months ago can be brought for just over £1k, you own it outright and just pay for maintenance.

If a client of mine ever mentions a lease, i will give my view but ultimatly the decision has to be thiers, i personally don't like them but they suit some people. If a client decides to go this route then i only do 3 years max and agree the end of term figure at the outset. My aim is for long term relationships, not smash and grab!!!!!

More than happy to help or advise anyone in this situation.

NotSoRecessionProof

I run a small tuition centre, we work with kids from deprived areas helping them improve their attainment levels, were completely self funded so under-resourced and over worked. We rely heavily on our photocopier - which allows us to limit the texts/workbooks etc we use. I'd say the photocopier makes about 200 - 300 copies a week - I dont think this is heavy usage.

But now we need to get a new copier and I am really confused. I was looking into the option of leasing and read this thread and now dont think that is such a good idea - but that leaves me with little option...

I can't afford to buy a new copier, I'm unsure of where to get an old copier from that wont go on the blink every other day (which our current copier had a tendancy to do) and leasing doesnt seem to be an option....

If anyone can give me advice I would really appreciate it....I am willilng to consider a 3 in one option - but also need to bear in mind that toners can be very expensive - and given we are very under resourced, even £40 can be a real stretch some months....