Dirty Little Secrets of Equipment Leasing

As a business there are many things to be careful of when entering into contracts and agreements.  Equipment Leasing might be on the top 10 list of shady deals or a Rip Off! Typically this involves a credit card terminal or other devices like a Clover Mini or Clover Flex.  It may also be a Point-of-Sale System. These equipment leases are NON CANCELABE for the term of the agreement!

​A business will pay over the term of the lease around 4 times what it will cost to purchase the same unit out right. For example, let say the lease payment is $35 per month (this is a low payment, I seen some as high as $99) for 48 months, this totals $1,680 for the equipment.  The merchant service provider probably paid less than $400 for the equipment and earned a commission.  Also, the $35 monthly payment does not include taxes the leasing company will collect from you and insurance that they will mandate and the intangible tax.  To end the lease you have to fulfill all of the terms of the Equipment Lease.  This means, make all payments and then return the equipment back to the leasing company.  That’s right you do not own the equipment. Oh, wait it gets better, you can keep the equipment if you purchase it from the leasing company after the 48 months.  It called a residual value.  A common factor is 10% of the aggregate of the payments.  In the above example you will need to fork over around $200 to purchase the equipment.  Also, on another note, the leasing company will not remind you that you completed the term. YOU have to initiate the return of the equipment to end the lease and payments.  I have seen situation where some businesses were still paying after 8 years.  The Equipment Leasing Company will not inform you.  Beware when you call the leasing company as they will try and talk you out of it by saying something like, if the equipment breaks while leasing, we will replace it.  I guess so, for you over paying, they want to keep you “hooked”. The other thing they might offer is a new lease and equipment.  DON’T DO IT!!!

The leasing company is not the only problem. It is the merchant service company that “sells” the lease.  What most people / business owners do not realize is that the leasing companies are nothing more than a financing company for the merchant service provider who uses them to help place terminals and equipment.  In theory, if a business cannot afford or have the capital to out lay for the equipment then the “leasing” company pays the merchant service provider the funds.  Many businesses I have helped deal with this nightmare, did not realize what they were signing, as they trusted the person they were dealing with.

Our firm offers a short term payment plans for a business that might need help to obtain credit card terminals and equipment. Sometimes, we may offer free loaners as part of the credit card processing account. It is the way we take care of our customers! It just the right thing to do. 

Let us know how we can help with credit card processing and point of sales system or perhaps an equipment lease problem, contact us at 904-638-8804.