Leasing has rapidly become the preferred method for acquiring new equipment and technology for many businesses. Thanks to more flexible payment structures, better value on purchases, and how easy it is to upgrade to new technology, many groups have moved away purchasing equipment outright. However, while leasing can bring enormous advantages to an organization, not all lessors view customer satisfaction as their top priority and some use clever schemes to take advantage and “scam” their customers. In this blog post we discuss the warning signs to look out for and some strategies you can use to ensure you are getting the best deal possible when leasing your next piece of equipment.
1. Beware of Upfront Deposits
It is not uncommon for a leasing company to require a small fee to cover the work completed by the lessor in preparing a lease option for your business. However, be cautious of companies that demand a deposit or advance payment to be made before a deal is signed. These offers are almost always non-refundable even if the leasing company is unable to provide you a leasing agreement or if you decide to turn down the offer. If the lessor asks you to pay any amount before a deal is signed, make sure to ask them for details about the amount paid and the reason for it. Reputable equipment leasing companies often have small fees, but these will be justified and reasonably-sized. Companies using equipment leasing scams, however, will seldom provide a good rationale for their fees and will ask for substantially greater sums upfront.
2. Check for Registration and Accreditations:
Many equipment leasing companies will cite their accreditations publicly and will belong to respected equipment leasing organizations such as the ELFA (Equipment Leasing and Finance Association). Companies running equipment leasing scams are rarely part of these organizations as they do not meet the stringent criteria for membership. This is not to say that an unaccredited company is automatically a scam; many smaller or highly specialized lessors lack such accreditations, but the absence of these credentials is a warning sign and you should research the lessor more perform you enter an agreement with them. Search the company in question with words like “review”, “complaint”, or “scam” to see if there have been any past discrepancies.
3. Take Precautions to Be Sure It’s Not Too Good to be True
There is an old adage, “if an offer seems too good to be true, it probably is” which should be applied to your evaluation of leasing transactions. Do not be afraid to look for the best deal on the market, but be skeptical of wildly unrealistic offers. Like any business, leasing companies have expenses and are trying to make a profit. If the payment structure you have been offered does not seem at all favorable to the leasing company, there could be an issue. Reliable leasing companies will offer a price that benefits both the customer and themselves. Don’t be afraid to ask questions if you have any lingering doubts.
4. Read the Small Print
Perhaps the most common method for scamming anyone is by changing contracts after they have been approved, but before the client has signed. Always read the entire contract to ensure you have a full understanding of the terms and conditions before signing. A recent Deloitte survey of 2,000 consumers in the U.S revealed that a shocking 91% of people consent to legal terms and conditions without reading them. Not reading that fine print can hurt you, as you are not only agreeing to the terms and conditions, but you are likely ignoring instructions that can financially impact you and your business. Take your time to carefully review the contract and never be rushed into signing anything. If a term is ambiguous, ensure you have confirmed the details before signing.
5. Be an Expert and Find an Expert
When deciding to purchase a new piece of equipment make sure that you extensively evaluate your needs and what product will best suit your unique situation. Ensure you know the capabilities you require, the product features that you need, and understand approximately what you should expect to pay. Simply being aware of an expected price makes it rather easy to spot a scam. Also, always partner with an experienced lessor with genuine expertise in the type of equipment you are acquiring. The better informed both parties are, the more productive negotiations will be, and the easier it will be to spot a scam.
Conclusion
Hopefully, by following these simple tips you will be better prepared to spot an equipment leasing scam before you become another unfortunate victim. It should be stressed that legitimate lessors outnumber scammers at this time. However, as the leasing industry grows and these uncertain times continue, being vigilant is crucial to ensuring the success of your business. For more advice on what to look for in a qualified equipment lessor call the equipment leasing experts at Meridian at +1 (855) 980-4578 or send an email to [email protected].