Understanding Lease Payoffs
A lease payoff in the copier industry refers to the process where a new dealer clears the remaining payments on a customer's existing copier lease, allowing the customer to transition into a new lease with upgraded equipment, while managing the return of the old equipment to the original leasing company as per the return instructions, ensuring a seamless switch to better-suited copier solutions.
Copier Lease Payoff Explained - Step by Step
If a customer is not happy with their current copier lease, maybe due to the equipment, service, or the price, they can look for a new deal with a different copier dealer. To make this switch, the new dealer will take care of the remaining payments on the old lease, allowing the customer to start fresh with a new lease.
Here’s how it works step by step:
- The customer reaches out to a new copier dealer and asks for a quote.
- To move forward, the customer needs to share two pieces of information with the new dealer:
- A copy of the monthly lease invoice from the leasing company showing the current monthly payment.
- A copy of the lease agreement which shows when the lease started.
- Once the dealer has these documents, they'll talk to both the customer and the leasing company to find out how many payments are still left on the old lease.
- The dealer then does a simple calculation: They take the monthly payment amount, add any tax, and multiply it by the number of remaining payments. This total is what's called the "lease payoff" amount.
- This lease payoff amount is what the new dealer will cover to clear the old lease, making way for a new lease with the customer.
By sharing the right documents and working with the new dealer, the customer can transition out of an unfavorable lease and into a new one that better meets their needs.
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The Full Process Details
When a customer wants to transition to a new lease with updated equipment, the dealer, upon determining the lease payoff amount, crafts a new deal. Here’s a simplified breakdown of the steps following the calculation of the lease payoff amount:
- New Deal Creation:
- The dealer puts together a new deal for the customer, typically including newer equipment, and they both sign a new lease agreement.
- Equipment Delivery and Installation:
- The dealer delivers and installs the new machine at the customer’s location, and the new lease deal gets funded.
- Lease Payoff Check Delivery:
- The dealer hands over the lease payoff check to the customer, which covers the remaining payments on the old lease.
- Old Equipment Storage:
- If there are many months left on the old lease, the dealer may offer to store the old equipment in their warehouse, or the customer can choose to store it themselves.
- Continued Payments:
- The customer continues to make monthly payments to the old leasing company until the old lease term concludes.
- End of Lease Notification:
- With three months remaining on the old lease, the customer sends a letter of intent to the old leasing company, indicating they won't renew the lease and requesting return instructions for the old equipment.
- Return Instructions Receipt:
- Upon receiving the return instructions from the leasing company, the customer forwards them to the dealer.
- Old Equipment Return:
- The dealer either picks up the old equipment from the customer's location or, if already stored in the dealer’s warehouse, ships it back to the leasing company as per the return instructions, at no additional cost to the customer.
- Lease and Equipment Return Completion:
- With the old equipment returned to the leasing company, the old lease is officially concluded.
This process ensures a smooth transition from the old lease to the new one, with minimal hassle for the customer, while also taking care of the return or storage of the old equipment.
