The trend is universal. A business is established; it struggles through multiple teething issues in the early years; and then it suddenly flourishes like a flower when the sources of early troubles become resolved. Such growth is usually associated with increased business from clients or customers, consequent growth in workforce to cope with the extra work, and most importantly improvement of office equipment.
If your business has suddenly grown from its fledgling state to an established and quickly growing state, then you must be planning to switch from multiple entry level printers to one elaborate and advanced multifunction printer. In such a scenario, if you’ve done your research, then you know that you have two options. The first is to lease a multifunction printer and the other is to buy a multifunction printer.
Should You Lease A Multifunction Printer?
The big question is whether you should lease a printer or buy a printer. We’ve already dealt with the dilemma of lease a printer vs. buy a printer in a highly detailed manner in a previous post which you can read here.
However, in short, you should know that most growing businesses start with deciding to lease a multifunction printer before moving on to buying one. The reason for this is manifold but the primary purpose here is to get a feel of the device in question.
For instance, if you’ve been using entry level desktop printers till now, then you’ll have to go through a steep learning curve with a multifunction printer. Don’t worry, the steep learning curve, here, doesn’t mean that using a multifunction printer is hard. Instead, the steep learning curve is with reference to learning about all the benefits that multifunction printers can bring to a workplace with all their features.
When you lease a multifunction printer, you’ll also identify which features you use heavily and which you don’t. If you spend the first couple of years getting to know all the dynamics of using a multifunction printer via the lease route, then you’ll be better prepared to buy one.
Moreover, if you’ve only now started considering the multifunction printer option, then it’s highly likely that paying for one straight up may be too much for your business. A couple of years of leasing a multifunction printer will also allow you time to prepare for the big purchase.
So, that answers the question of whether you should lease a multifunction printer in the first place. Let’s move on to how you should lease a multifunction printer. Here are some parameters you should consider carefully before signing that agreement.
Capital Lease vs. Operating Lease
When you go to the local dealer or distributor with the desire to lease a multifunction printer, you’ll be given the choice of two types of leases. The first is a capital lease while the other is the operating lease. Both of these types of leases have their benefits.
Capital leases are generally long term agreements with the usual period being five years. These are leases that will act like loans on your balance sheet. Whatever multifunction printer you get with this lease will be considered to be your business’s asset which means that you get to use clauses for asset obsolescence and depreciation.
Operating leases, on the other hand, are short term leases with the usual period being three years or less. The biggest benefit of these types of leases is that they will not require you to stump up a lot of money upfront. Moreover, you should also know that the leased multifunction printer will not be considered to be your business’s asset as the leasing company will retain ownership.
The Buyout Options
Like the type of lease, you will also be given a choice between three types of buyout options when you go out to lease a multifunction printer. The first type of buyout option is known as the Fair Market Value or FMV, the second is called the $1 buyout option, while the third is simply called lease to buy.
In the case of the FMV buyout option, you’ll have the option of buying the multifunction printer from the leasing company for the market value of the printer in question.
The $1 buyout option, as the name suggests, will allow you to buy the multifunction printer you’ve leased for $1. However, don’t get excited just yet.
The trick here is that both options become active at the end of the lease period. Are you still excited? Hold your horses. The monthly payments in a lease agreement with FMV will be lower than the monthly payments that the lease agreement with the $1 buyout option will require.
This means that even though you can buy out the multifunction printer at the end of the lease for $1, you would most likely have already paid more than the value of the printer in monthly payments. On the other hand, while the monthly payments of the lease agreement with the FMV option will be lower, the end of lease period value of the printer may run in hundreds of dollars.
The third option pertains to paying the value of the multifunction printer throughout the lease period. Monthly payments are set in a way that you end up paying the current value of the printer at the end of the lease period.
It’s an even decision between these three options and your decision should depend on your business’s situation.
At the same time, you should also take note that the shorter the lease period the less money you’ll be paying overall. Effectively, if one year lease required $200 per month, two year lease will require $175 per month.
However, by the end of the two years, you would’ve ended up paying $4800 in the first option and $4200 in the second option. Do you see what we mean?
There are a number of other considerations that you should bear in mind if you decide to lease a multifunction printer. The first of these is whether you’ll be allowed to discontinue the lease. Usually, lease agreements have such clauses but they come with prepayment penalties.
The size of these prepayment penalties can vary greatly depending on a number of factors including lease periods and the type of printer in question. Therefore, you should find out the parameters that will govern your choice of discontinuing a lease before you sign on the dotted line.
Another question you should ask is whether the lease agreement requires you to get insurance for the leased multifunction printer. Either the lease agreement will require you to get insurance for the device after you lease a multifunction printer or the cost of the same will be added to your monthly payments.
Finally, once you lease a multifunction printer, start using it, and find that it is useful for your business, you may want to lease another multifunction printer or even some other kind of device. Before you sign the lease agreement, you should find out if you can add to the lease as and when you need.
Typically, leasing service providers will have no problems with you adding equipment to the agreement that you signed to lease a multifunction printer. In such situations, the monthly payments are revised but the terms in the lease agreement remain the same.