How a Copier Lease Works
I wanted to talk about leasing, and especially as it pertains to copiers. When you’re doing a lease, there’s two different types of leases – well, there’s one in that, but two common types. There’s a fair market value lease, also called an FMV lease or a dollar buy-out lease. And what this is, is essentially the “fair market value” means at the end of the lease, you’re going to have to pay whatever the lease company thinks the fair market value of that particular copier is. Whereas, with the dollar buy-out, you’ve pre-defined how much you’re going to pay, and at the end of the lease, you pay a dollar and the copier belongs to you.
So we find that more often, you’ll see fair market value leases are the ones that are quoted. And the reason for that is because it provides a lower monthly payment, even though alternately, in the long run, it may not be quite as good of a deal, but it’s easier to settle over payments, so often, we’ll try to go through that. So I want to show you how these work. And we’re going to go ahead and open up a spreadsheet and assume that we are buying a $10,000 copier. So your monthly payment would be your dollar amount of the copier, so $10,000, and then, times the lease rate factor.
So if we go back to our document here, you would say this is $3,000 to $74,000. These are the number of months, so if it’s 36, 60, 48, the most common is 60. And so what we’d end up doing is taking the 0.01921 and apply that. Times 0.01921, that is the monthly dollar amount that you would get charged on a fair market value lease, which would be returned to the leasing company.
So that’s a five-year. Now, we did the same exact thing that I just did right now to a dollar buy-out. And it’s going to be a different number than this client 0.01921. If we go back here, 60 months, dollar buy-out is 0.02224. So same deal, 0.02224. That’s $224.94. The differential – I’m just going to do that real quick, which is this minus this. So $30 a month difference. And then, this is the one that you would keep.
Now, if you return this to the lease, generally, you’re going to have to pay to have that shipped back. That could be another, let’s say $200 to $250. So let’s go ahead and equal the sum. It could be up to 400 divided by 60 – is $6.66. And then, if you can sell the copier for $400 or $500, we’re essentially looking at the sum, which is what you need to be able to sell the copier for at the end if you didn’t want to – 30.34 minus – so that’s 24. Multiply that by 60. So essentially, you’re paying $1,480 for a $10,000 copier if you do it this way, at the end. It may or may not be worth $1,400. It just really depends on if you’re going to use it for another year.
If you are, then you don’t have to deal with the lease payments that following year. If you only swap out after five, you’re going to have a lot of trouble getting $1,400 back. So if you’re pretty much positive that you’re going to be done at five, that becomes a better deal, you think you might use it for six or seven, then the dollar buy-out becomes a better deal.
So I just wanted to go over kind of how the math works when you’re doing a copier lease. This is the equipment portion. And then, of course, you’d have your supplies and maintenance part of the agreement. And let’s say you pay a penny a page and that’s 10,000 pages – when you add 10,000 pages that’s included in the base. Then, you’d essentially add this 100 to this 192, and you would get $292 per month lease payment that included 10,000 copies.
And so that’s kind of how we do copier leases, and get you the number that you see when you get your quotes from your copier dealer. If you see that your number is, let’s say $240, and it’s a five-year lease, you could always go backwards especially if there’s no prints included. So if you just go 240 divided by 0.0191-2 I think it was – and that would be $12,550 copier.
So just get to know how these things work so you know how you’re spending your money. If you need any help on getting a lease for a copier, why don’t you give us a call at 303-586-7704? And I am Jesse Harwell. I’m with Pahoda Image Products. We’d love to help you understand exactly where all your costs are coming from, and be your next copier dealer. Thanks so much.