Multifunction Copier Leasing in Colorado Springs. What is a fair market value lease?

Multifunction Copier Leasing- Colorado Springs

In its simplest form, a fair market value lease or FMV is a financial leasing arrangement between a lessor and a lessee.  The lessor is the organization or person that owns the property and the lessee is the organization or person that is leasing/utilizing the equipment provided from the lessor.

In the world of multifunctional copiers, typically companies lease the equipment.  Multifunction copier leasing does not tie up a firm’s capital in equipment that tends to have a life of approximately 5 years.  Leasing allows companies to acquire equipment, sometimes higher quality multifunctional equipment through leasing versus if they had to purchase or buy the multifunctional equipment.  Leasing is sometimes much more financially sound that laying out up front capital for equipment.

Multifunctional copier leasing is very standard in the business world.  A copier dealer will show you various models to choose from, you pick the model you want, settle on a price, then someone within the organization with authority will engage in a lease with a leasing company.  Typicall the leasing company is a third party leasing company and is not the copier dealer.  There are many leasing companies out there and copier dealers typically have a handful of leasing companies they do business with.

Do not sign a lease until you have read the lease.  Leases are written, as you might expect, in favor of the lessor.  Be especially careful on the terms or conditions at the end of the lease.

Typically, multifunctional copiers are leased anywhere between 36 months and 63 months.  Leasing companies will typically not extend terms beyond 63 months for multifunctional copiers/printers simply because the equipment’s life cycle does not usually exceed 63 months.

Leases will have and “end of term” clause that requires your organization to notify the leasing company of what you are going to do with the multifunctional copier at the end of the lease.  Are you going to return the equipment?  Or, are you going to buy the equipment?  Leases that have the option to purchase the equipment at the end of term are know as FMV or Fair Market Value leases.  The leasing company will set a value or price for the equipment after the end of the leasing term and your organization will have the option to purchase the equipment.

It is very important that you understand the notification terms or the end of term intent.  You must typically notify the leasing company via certified mail within a set time window what your plans are with the equipment.  If you fail to notify the leasing company within this window, you may get “rolled”.  This is a term that is used which simply means that you have not met the conditions of the lease and you may be legally obligated to continue leasing the equipment for a certain period of time.

Typically, if your organization anticipates only keeping the equipment for the term of the lease i.e. 36 months, 48 months, 60 months, then a FMV lease is normally the best financial instrument to utilize.  However, if your organization typically holds on to equipment for longer periods of time, then you might want to consider a $1.00 buyout lease aka operating lease.  I will blog more about this type of lease in upcoming posts.

My final thought on leasing, and more specifically the notification requirement to the leasing company is that you must notify the leasing company, not the dealer you purchased/leased the equipment from.  The dealer is not a party to the lease agreement.  In fact, the dealer has no legal participation in the lease that is between your organization and the respective leasing company.  So, don’t send your certified letter to the dealer.  The lease agreement specifically states that you must notify the lessor (the leasing company).  The dealer has no obligation to inform the leasing company that they have received a certified letter from you stating what your intentions are at the end of the lease term.  It is your responsibility to notify the leasing company.  Period!

Please contact me via e-mail if you have questions or concerns.  Or, visit our website.

paulb@axisbt.com | www.axisbt.com

 

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