Lease Add Ons are a big aggravation and tend to break the confidence you have in your equipment dealer sales rep. When the rep tells you the lease payment is $299 for 60 months, you expect an invoice for $299.00. Don’t You? Yet, how often do your experiences concide with your expectations, in this case? Believe me, I loath half truths and have come to expect them, no matter how many questions I ask.
It’s unlikely you will get a bill for the bargained $299 + sales tax. So, be prepared for that first invoice to be a bit more than you were told.
Here is a list of some of the lease add ons you should anticipate (or check out ahead of time):
- Insurance – A forced premium (monthly bill) if you don’t prove you’ve got the lessor’s equipment covered adequately
- Interim Rent – Added portion of a month’s rent. Hint: The bill will never be less than a month’s payment.
- Doc Stamps on the note: The sales rep won’t have a clue about this, except for complaining customers. Florida is unique in this regard. If you have a non cancellable lease, Florida will get this money and you’ll pay for it. The rates and information for Florida document stamps is here
- Documentation Fee – It will be shown somewhere in the lease, but the rep may forget to mention this. This is a pure profit. In the leases I’ve seen over the past 30 years, a low fee is $75.00 and some as high as $299.00. This is a one time fee of which the equipment dealer may get a portion. It’s comparable to the typical dealer fee charged in a car lot, but less.
Tip about Lease Add Ons
An equipment dealer gets the option of marking up the documentation fee for additional profit! For example, suppose leasing company “A” charges $75.00 for the documentation fee. The equipment company, say Back hoe dealer or copier company, may have the documentation changed by leasing company “A” to read $125.00. “A” keeps the $75.00 they ordinarily charge and your favorite copier company or back hoe dealer gets the other $50.00.
What can you do about lease add ons?
You can negotiate documentation fees and interim rent. The challenge is that the equipment sales rep may have little or no control over these things. Typically, the rep makes money in the form of commission on the dollar amount of the equipment financed, not on add on fees or points on the lease itself. I’ve found that you can get at least some of the add ons removed by offering a convincingly angry argument directly to the leasing company. Don’t wait to call them. Instead, get the phone number for the leasing company and give them a phone call, not an email. Voice your disgust early and your efforts will normally pay off. For example, argue about the documentation fee and put up a stink about the interim rent. I bet you will get at least one of them reduced or removed. That will save you a few bucks.
Another strategy you can adopt, is to get the best cash price from the sales rep and get financing for the lease elsewhere. Naturally, this takes more time. However, you may find that by telling the sales rep of your intention, he or she may squeeze an extra few bucks out of the lease in the form of the documentation fee or a couple bucks a month.
The key to strong negotiating is as much about appearing strong as it is about actually knowing the whole game. In other words, if the sales rep fears you are not a push over, the rep may give in and make additional concessions. That is one way to get lease add ons reduced.