If you're reading this article, you're not alone. Whether you feel you're paying too much, your equipment is outdated, or your servicing dealer has let you down; there are plenty of reasons companies want out of 'bad' contracts.
Finding out if you're able to get out of your lease is simple, and we're here to explain how. It's best to have your lease agreement, service agreement, and 12 months of volume reports on hand.
1. Calculate Your Remaining Balance
The first thing you'll need to do is calculate your remaining balance, or 'buyout.'
Add your current monthly lease and service payments together and multiply by the months remaining until expiration. If your service agreement payment is included in the lease agreement, it will be noted somewhere on your lease and you will not have a separate service agreement payment.
(Lease Pmt + Service Pmt) * Remaining Months = Remaining Balance
2. Understand Your Current Total Cost of Ownership (TCO)
The goal is to find your "all-in" cost per month, so you have a baseline. This information will be useful when you begin asking for/comparing competitive quotes for a replacement. In addition to your lease and service payments, remember to add in any miscellaneous administrative fees (toner shipping, billing fees, etc.), as well as, the average monthly sum of any overages you accrued over the previous 12 months.
Pro Tip: Most service overages are billed on a quarterly basis. If this is the case for you, pull your last four (4) service overage bills, add up their totals, and divide by 12. This will give your your Monthly Average of Service Overages.
Monthly Lease Pmt+ Monthly Service Pmt + Monthly Msc Admin Fees + Monthly Avg of Service Overages = Current TCO
3. Know Your Rights
Lease agreements are legally required to have an "Intent Not To Renew" clause in their Terms & Conditions. This clause requires you (the lessee) to inform (in writing) your intent not to renew the current lease to the current vendor and/or financial institution. Failure to provide this intent can result in an automatic renewal of your current lease up to an additional 12 months. Search through the lease agreement Terms & Conditions to find the window in which you must provide this letter; it is often between 90 and 30 days of your lease expiration.
4. Negotiate a New Deal
Now you know your buyout, Total Cost of Ownership, and you understand your rights in regards to the automatic renewal clause. Find a respected company in your area and share this information. Be up front about your expectations, as well as, the areas in which you are looking to improve. If you would like assistance calculating any of the above information, or a quote on a new machine, we would be happy to help. Simply contact us here and a representative from CDI Office Technologies will reach out as soon as possible.