Equipment Leasing

Avoid Leasing Payment Terminals

The number one reason not to lease bankcard equipment is that you are upside down before you sign the personal guarantee. For example: a $39 lease for 48 months will cost over $1,800. Within months the terminal equipment rapidly depreciates to the used equipment prices of around $300 or less, but you still owe $1,700.

Equipment leasing has been around as long as the terminal equipment itself. The leasing companies who collect the payments and finance the systems fund the equipment sales agent. Many processing companies today are still more into the equipment leasing business than they are in the merchant card processing and service business. They use gimmick rates to sell high-priced leases to unsuspecting merchants.

A lease is simply a financial instrument. The leasing company is a finance company and is not responsible for maintenance, warranty, repair, upgrade, or service. They are only concerned with collecting your monthly payment. Most leases automatically renew and contain a buyout clause at the end of the term that must be acted upon to end the agreement. Watch out for a fair market buyout clause. Fair market is vague, but even if it is capped at 15% of the original lease, in four years you may end up paying as much as the equipment cost today. Some key features presented when selling leases are spreading payments over time and the tax advantages. Monthly equipment rentals provide tax advantages equal to that of leasing, but without a personal guarantee contract.