If you’ve ever negotiated a printer or copier, you already know how difficult it can be to make sense of an equipment lease agreement. Combine that with the fact that these agreements are near-impossible to break, and you’ve got the perfect recipe for a contract you never wanted and can’t get out of.

This guide will walk you through several of the most notorious contract stipulations to help ensure that you know what you’re getting into before you sign.

1. Annual Rate Increases – Most copier contracts can be broken down into two parts: equipment and service. Depending on the dealer, a contract may include annual rate hikes on both parts. Ten percent is a standard increase on service, accounting for the additional maintenance required as a machine ages. But why should you pay more for your equipment as it gets older? You shouldn’t. Especially when you consider that rate increases compound year over year. Let’s break that down. If you pay $100/month in the first year, you’ll pay $110/month in the second year, and $121/month in the third year. By the time year five rolls around, you’ll be paying $146/month—that’s almost 50 percent higher than you paid when your equipment was brand new. But it doesn’t have to be this way: Equipment rate hikes are left to the discretion of your dealer. In other words, pick a dealer that won’t raise the rate on your equipment.

2. Auto-Renewal – Lease agreements typically include an auto-renewal clause that re-ups your contract for an additional year at the end of the initial term. What’s more, this additional year is subject to the same rate hike increases mentioned above. So if your 5th year payment was $146/month, now it’s $161/month. How do you avoid this situation? Be aware of your obligations! Most leasing companies require written notice of intent to terminate a contract anywhere from 60 to 120 days prior to the end of your term. If you don’t get that notice in on time, you’re stuck for another year. But you can protect yourself on the front end: Pick a dealer with a lease policy that auto renews on month-to-month basis.

3. Coterminous Agreements – Okay, you’re two years into your current lease and you need an additional printer or MFP. Should you sign a new lease or wrap your new equipment into an existing lease? Your decision in this moment can have serious implications on your financial commitment. The best way to protect yourself is with a coterminous agreement. In plain English, a coterminous agreement adds the new equipment to your current lease. Under this type of agreement, your financial obligation on both new and existing equipment will conclude at the termination of the existing lease. But be careful: Many dealers will try to set you up with a new lease that combines your new and old equipment under a new 5-year term. What’s more? They’ll move the service portion of your existing contract to the new lease. Then they’ll stipulate that all service is paid in year five. A dealer might call this a coterminous agreement, but in reality it’s just a new lease with an unmovable service contract!

4. Service Allowance Adjustments – Most service agreements base your monthly rate on an average of your past usage. But what happens when your printing needs fall below that average? Wouldn’t it be great if your monthly rate could change with your business?  It can. Pick a dealer that offers service allowance adjustments based on your actual usage.

5. End-of-Contract Obligations – In an ideal world, you could call it quits on a contract as soon as you found a better deal. In reality, equipment leases are binding financial agreements and most of them do not allow for early returns. What does that mean? In order to get out of a contract, you’re going to need to pay the balance of your future payments. This is called a buyout to return, and as you might expect, it’s the process required of the lessee to end a contract early. Make sure that you’re comfortable with your buyout obligations before you sign. Don’t let a dealer charge additional fees or force you to purchase your equipment in order to cancel a contract.

Every day our phones, tablets and computers bombard us with compulsory terms and agreements. If you’re like me, you probably breeze through these annoying roadblocks with little regard for the details contained within. If I could leave you with one piece of advice about copier contracts, it would be this: Know what you’re signing before you sign!

Knight Office Solutions is committed to transparency throughout the sales process. We will not raise the rate on your equipment from year to year, nor will we sign you up for add-on contracts that keep you on the hook into perpetuity. It’s the right thing to do, and it’s the reason why Knight customers report some of the highest satisfaction in ANY industry*

Pick a dealer that won’t sell you a landmine lease, contact one of our imaging consultants today.

*Based on 96.9 Net Promoter Score (calendar year 2018)

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