Bundled Equipment lease
A lease that has the equipment service included with the lease payment meets the Bundled Equipment Lease Definition. Various industries have their own version of a bundled lease. For instance, the software industry has a version of a “bundled lease”. That version combines the software with a software maintenance program. On the other hand, the copier industry bundled equipment lease includes the service agreement. The bundled equipment lease combines a hard asset with an intangible.
5 False Assumptions about the Bundled Equipment Lease
- The leasing company is responsible for equipment service.
- You can terminate the lease if the service is unacceptable
- You gain leverage by bundling the service in the copier lease
- You will get better service if service is in the lease instead of separate
- The service company guarantees the operation of the equipment
The Whole Truth About the Bundled Equipment Lease
The leasing company is not responsible for service in a finance lease. Furthermore, you cannot cancel the lease if the service is absolutely deplorable. The equipment company and leasing company will benefit more than you by having service bundled in the lease. The dealer gets the upper hand by locking the lessee into service for the entire term of the lease. I’ve seen dealers the lessee out of the service portion of the lease in rare circumstances. However, I have witnessed all to many situations where the servicing dealer abandons the customer. That occurs despite the dealer having locked the lessee into a bundled lease. The best course of action is to have remedies for this contingency in writing before signing the lease.
Alternatives to the Bundled Equipment Lease
Bundled Equipment Leases were not common 20 years ago. I didn’t see copier service included in copier leases until maybe 15 years ago. Prior to that time, dealers may have slipped in a few copies for free. However, leasing companies didn’t approve of the practice at that time. Times have changed. You have more options now as a lessee, than you did back then. Additionally, increased competition means you have an arguably greater advantage to name your terms. I recommend you demand your dealer provide you with quotes that include options to keep the service separate from the lease, as it used to be. I routinely have offered both bundled options and separate service agreements. In the event, a dealer won’t give you the choice, I would go elsewhere. I provide more information in case studies on the topic of bundled equipment lease contracts.