Leasing has helped thousands of businesses acquire the technology and equipment they need to grow. It is an incredibly easy way to free up cash flow without hurting your existing lines of credit. There are many MANY positives when it comes to leasing. But, as with most industries, there are some companies out there looking to make a little extra by scamming trusting business owners. Here’s a few things to look out for so you don’t get screwed on a lease agreement.
THE EVERGREEN CLAUSE
Each Term shall automatically renew for subsequent period of the same length as the initial Term unless either party gives the other written notice of termination at least (30) days prior to expiration of the current term.
If you EVER see this phrase in your lease agreement, have it removed IMMEDIATELY. This clause essentially states that unless you notify your leasing company that you’re nearly done making payments on your lease before the last month’s payment, you are LOCKED IN ANOTHER LEASE for the same term. That’s right. If you don’t give a month’s notice, you’re screwed.
READ THROUGH YOUR TERM SHEET
It may seem like a no brainer, but all of those little paragraphs are incredibly important. If you sign a lease agreement without reading through the terms, you leave yourself vulnerable to whatever the leasing company may have proposed in the document. Whether it be an evergreen clause, an extra payment for no reason, or…
PHONY INTEREST RATES
Did you get hooked into a lease agreement because you thought you were getting a killer rate on your lease? In most instances, if a deal seems to good to be true, it’s because IT IS. Some lease companies will lure in prospective buyers with promised interest rates well below the competition, but when the lease agreement is penned, the numbers show a different story. Be sure your leasing company is up front with you from the start.
The long and short of it is this: read through your lease agreement and make sure you ask a ton of questions throughout the process. A good financing company will walk through a finance agreement with you from start to finish. Don’t be afraid to ask for clarification on any clauses you are unfamiliar with. That’s what the financing company is there for.
Ever get screwed on a lease agreement? Did you catch a shady leasing company in the act? Tell us about it! Email your stories to firstname.lastname@example.org.