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What is a Copier Lease Buyout? (And Why It Might Be a Good Idea)

November 25th, 2019 by Function4

business people signing lease blog

The copier you leased a few years ago was a perfect fit for your day-to-day operations—until it wasn’t. Now your company could really use an upgrade.

The problem is, the leasing period for your copier isn’t complete. A lease is a non-cancelable contract. This means you’re legally bound to continue paying for equipment that isn’t fully meeting your business requirements.

What can you do?

If your company has a copier lease that no longer is in its best interests, you have the option to find a copier dealer willing to “buy out” your copier lease.

First of all, let’s discuss what a copier lease buyout option involves.

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What Is A Copier Lease Buyout?

A copier lease buyout is sometimes called an early buyout. It is the option to purchase a leased copier or printer at any point during the lease agreement. The leasing company decides the buyout amount based on the remaining payments left and the equipment’s residual value.

A business can buy out their lease early themselves by paying cash. However, it’s a far more common practice for a copier dealer to work with the business to buy out a lease from a competitor’s customer.

We’ll discuss how this works in the next section.

How Does a Copier Lease Buyout Work?

Buyouts can vary from dealer to dealer, but in general, they work like this:

  • The new copier dealer helps you find new equipment and processes paperwork for a new lease.
  • The new leasing company bundles the new lease with the remainder of your old lease, and they cut a check to your existing lease company to pay off the old lease.

It’s important to note that in a copier buyout, you are not truly getting “out” of a copier lease. You’re trading one lease for another with better equipment or more favorable terms.

Why Do Copier Dealers and Leasing Companies Buy Out Leases?

Copier lease buyout is common among copier dealers. Of course, dealers and leasing companies wouldn’t agree to buyouts if they lost money on them. Their motives are pretty much the same.

Gain Your Business

A lease buyout is a great way for a copier dealer and leasing company to bring in new business without incurring any losses. That’s because companies that want a lease buyout are usually interested in a replacement copier or printer.

The copier dealer gets to sell new devices to your new leasing company. The new leasing company gets to sign you up for a lease. If all goes well, your company will bring the dealer and leasing company long-term business.

Add on Service Agreement

Copier service agreements are separate contracts that can often be bundled with copier leases. Under a service agreement, the copier dealer agrees to provide maintenance and repairs for a set amount of time.

When It’s a Good Idea to Seek a Buyout—And When It’s Not

Buyouts are great option when a copier lease agreement is no longer meeting your needs—depending on how far you are into your lease period.

Need to Upgrade Equipment

With a buyout, you might be able to negotiate for more favorable copier leasing rates. A buyout also opens the door to an immediate equipment upgrade. This means you can get what you need without waiting months, or even years, for a lease period to end.

Length of Time Left on Lease

Generally, dealers are willing to buy out leases that have 23 months remaining or less. Leases with more time on them are often cost prohibitive for them.

There are exceptions to that rule. If your company is leasing a brand of equipment that a dealer already sells, that dealer may be more open to buying out a lease with more than 23 months to go. That’s because it’s more affordable to upgrade your company’s equipment. The dealer might even want to buy the original equipment your company was leasing and re-sell it.

Alternatives to Copier Lease Buyout

If a copier lease buyout isn’t right for you, don’t despair. There are five alternatives that may allow you to legally get out of your current lease:

  1. Early termination.

    Read your lease carefully. Most leases will clearly explain any conditions for early termination, plus any associated fees.

  2. Breach of contract.

    Many copier leases include certain performance guarantees. If those guarantees are not met, the leasing company may be in breach of contract. This means you can get out of your lease without a penalty.

  3. Sub-leasing equipment.

    Some copier leases allow another company to take over your copier lease. You are the original lessee. That means you – not the sub-lessee – are responsible for the equipment.

  4. Renegotiation or early termination.

    It’s unlikely that your leasing company will agree to this. It never hurts to ask, though.

  5. Early payoff.

    Paying your lease off early will get you out of the agreement without any additional penalties. The downside? You’ll be stuck with equipment you may no longer want.

Final Thoughts on Copier Lease Buyouts

Why would a business go the lease buyout route? In many cases, a buyout is the only feasible option for companies that are unhappy with their copier lease agreement. Remember, a copier lease is a legally binding agreement. You can’t simply cancel or end it early.

A buyout can be a great compromise if your current copier lease isn’t meeting your needs. You get out of a lease that no longer serves you – without any messy legal issues. The arrangement will likely provide you with better lease terms and newer equipment, too.

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Function4 serves Houston, Beaumont, Paris, and the surrounding areas.