“How can I get out of my copier lease?”
It’s a question we hear quite a bit at BDL, from NZ businesses that have signed a contract with a competitor but who now feel trapped in that agreement.
There are many reasons why you might look at breaking a copier lease agreement. The needs of your business may have changed. Perhaps you need to upgrade your machine. Maybe you’re facing financial hardship. It may even be that you feel the copier leasing company has misrepresented the agreement.
The good news: you may have a few early termination options. In this guide we’ll walk you through the ways that you may be able to legally terminate a copier leasing and service agreement while minimising penalties and losses.
Understanding copier lease agreements
First things first: what exactly is a copier lease?
A copier lease is a contractual agreement that grants your business access to a new copier or multifunction printer (MFP).
Rather than facing an upfront payment of thousands of dollars for a modern machine, you instead pay a simple lease payment once a month. The copier lease contract will span a specific time period, generally 2-5 years. The longer the duration of the contract, the lower the monthly fee will be.
When you lease a copier from a lessor like BDL, we retain ownership of the copier. That means it’s up to us to service and maintain the machine, which can even extend to supplying toner. This maintenance is usually covered by a separate copier service agreement.
You can think of a copier lease like a car lease: you choose your preferred model (usually a new, high-quality machine), then agree on the lease terms with the copier dealer, including how much you’ll pay per month, and how many months you’ll pay it for.
But there are an array of reasons why you might seek to terminate your copier and service contracts sooner than the end date. Let’s look at a few examples, then find out what your options might be if you find yourself in a less-than-ideal leasing situation.
Reasons for terminating a copier lease
A few common scenarios that might lead you to consider terminating the copier lease include:
Changing business needs
Businesses grow, evolve, pivot. Your organisation might look very different to the one that signed a long-term copier lease three years ago, and your printing, copying and scanning needs may have changed dramatically too. If you’re locked into a binding contract that doesn’t offer a way to change or upgrade your machine, your business might even be held back by your current copier.
Financial hardship
If your business experiences a downturn, you may struggle to make ends meet, including making payments on your copier lease. And the situation is only made worse if leaving the contract prematurely incurs early termination fees.
Outdated technology
Technology moves quickly, and your business will benefit from access to the best. If you’ve signed a long-term lease, you might miss out on new capabilities that can enhance the efficiency and productivity of your office. Five years ago, for example, useful features like cloud connectivity, active cybersecurity and document editing capabilities weren’t as common as they are today. If the terms of your lease don’t allow for early upgrades, you could be stuck with a somewhat outdated piece of equipment.
Poor performance
Your copier leasing company will be responsible for servicing and maintaining the machine for the duration of the contract. If they fail to do so properly, your copier may be more prone to breakdowns, which can ultimately affect business operations and profitability.
Lessor misrepresentation
Do you feel as though the realities of the copier agreement don’t quite align with what you thought you were signing up for? There may be grounds for an early termination, although you’ll need proof that misrepresentation has occurred.
Methods to terminate a copier lease
Now that we understand a few potential whys, let’s turn our attention to the hows. How exactly might you terminate a copier lease?
Review contract terms and conditions
Carefully review your lease contract, particularly the termination clause. This will outline the specific conditions under which you are able to end the lease early, without facing any penalties. It will also state any penalties you may be liable for if you break the agreement for reasons not covered by the termination clause. You should also check how much notification the lessor expects for lease termination – i.e. how early you need to send a letter of intent for breaking your lease.
Identify breaches of contract
If you feel that the leasing company has either misrepresented the agreement or underperformed in their duties, you may have grounds to break the lease early. In terms of misrepresentation, you’ll need solid proof of lies or distortions, like emails. In terms of underservicing, most copier lease terms and conditions will include performance guarantees, so check whether each of these has been met.
Check for upgrade, assumption or transfer clauses
An assumption or transfer clause allows another business to take on your lease, though this is only an option if you happen to find an organisation willing to do so, which may be a long shot. If the issue is that the machine is outdated or no longer meeting the needs of your business, check for an upgrade clause that grants you early access to a newer, better piece of equipment.
Pay off the lease early
A guaranteed way to get out of your copier equipment lease is to simply buy your way out. Be warned that a lease buyout will rarely save you money – most lessors base the fee on the monthly lease payments that have yet to be paid, right through to the end of the lease.
Negotiate with the leasing company
The best lessors understand that businesses change. At BDL we’re more than happy to negotiate how to end your current copier lease if it no longer suits your needs. Sure, a copier lease is a legally binding document, and we ask that our customers carefully read and consider the contract before signing on the dotted line, but if things change, we’ll work hard to find a solution that suits both parties.
Legal and financial advice
If you’re trying to exit a copier lease, but the lessor is being inflexible or unreasonable, it might be wise to consult a lawyer to understand your options.
From the very beginning of your new lease, try to get all important communications in writing, just in case you need them later. Confirm what was said on a call by sending an email afterwards.
You should also prepare for the potential penalties if things don’t go your way, whether that means staying in a lease and a service agreement that you’d rather exit, or paying the fees incurred by breaking the lease.
Conclusion
The advantages of a copier lease – no upfront cost, predictable payments, servicing and support – far outweigh the disadvantages. But there may be times when a lease you signed no longer reflects your business needs, wants, goals or situation.
And if that happens, you’ll want a leasing company who understands that circumstances can change, and who is willing to work out a compromise that allows you to adapt to those changes: a company like BDL.
Get in touch with our expert team today to secure your ideal copier or multifunction printer on a lease that works for you.
FAQs
What are the typical costs associated with terminating a copier lease early?
Some of the costs that may be incurred when you terminate a lease prematurely include:
- Early termination fee: If your agreement specifies this fee, you may need to pay either a fixed amount or a percentage of the remaining lease payments.
- Remaining lease payments: If there’s no specific fee to terminate the contract early, you may need to pay the remaining balance of all lease payments.
- Buyout cost: If your lease has a buyout clause, you may be able to pay a (potentially significant) lump sum to end the lease early.
- Return fees: You may incur costs associated with returning the copier, like shipping and handling fees.
- Breach of contract penalties: If ending the lease represents a breach of contract, you might be liable for additional penalties or damages.
- Performance clause penalties: If you broke the lease due to provider performance issues, you may need to prove this non-compliance, which can involve additional legal costs, although these might ultimately be reimbursed.
Can I negotiate the terms of my copier lease termination?
Yes. While most lessors will have their standard terms, if you choose a quality service provider like BDL, you can negotiate those terms before your contract begins. And if things change and your copier lease isn’t working for you at some point in the future, you can speak to a quality provider to negotiate an exit too.
How can I transfer my copier lease to another business?
If your lease includes an assumption or transfer clause, which allows you to transfer the lease to another organisation, the process for completing that transfer will generally be determined by the lessor, and is often outlined in the contract.
What should I look for in the termination clause of my copier lease agreement?
A few of the key things that you should look out for include the specific conditions that allow you to terminate the lease, the fees that are incurred in different scenarios, your notice period requirements, buyout options, provider performance clauses, assumption/transfer clauses, and automatic lease renewal clauses.