A Quick Reference Guide to Leasing a Copier/MFP for Your Business

In today’s fast-paced business environment, efficiency and productivity are paramount. One way to achieve this is by equipping your office with the right technology, such as a high-performance copier or multifunction printer (MFP). Leasing a copier/MFP can be a smart financial decision, especially for small business owners and office managers looking to manage costs effectively. This article will answer the most commonly asked questions about leasing a copier/MFP, helping you make an informed decision that aligns with your business needs.

 

Understanding the Basics of Copier/MFP Leasing

 

What is a Copier/MFP Lease?

A copier/MFP lease is a contractual agreement where a business rents a copier or MFP for a specified period, typically ranging from 36 to 60 months. Leasing provides access to the latest technology without the significant upfront costs associated with purchasing equipment outright.

 

Types of Leases

 

FMV Lease (Fair Market Value Lease)

An FMV lease allows you to use the copier/MFP for a set term with lower monthly payments. At the end of the lease, you have the option to purchase the equipment at its fair market value, return it, or upgrade to a newer model.

Advantages:

• Lower monthly payments
• Flexibility to upgrade equipment
• Tax-deductible payments

 

$1.00 Buyout Lease

Also known as a capital lease, this option allows you to purchase the copier/MFP for $1.00 at the end of the lease term. The monthly payments are higher compared to an FMV lease, but you own the equipment after the lease ends.

Advantages:

• Ownership of the equipment
• Fixed monthly payments
• Potential tax benefits as a capital expense

 

Most Common Copier Lease Terms

 

36-Month Lease

A 36-month lease is ideal for businesses that anticipate rapid technological advancements and want the flexibility to upgrade frequently.

 

48-Month Lease

This term strikes a balance between cost and flexibility, providing a longer lease duration with manageable monthly payments.

 

60-Month Lease

A 60-month lease offers the lowest monthly payments, making it suitable for businesses looking for long-term solutions without immediate upgrades.

 

Understanding Lease Rate Factor vs. Interest Rate

When considering a copier/MFP lease, it’s crucial to understand the concepts of lease rate factor and interest rate, as they play a significant role in determining your monthly payments and the overall cost of the lease.

 

Lease Rate Factor

The lease rate factor is a unique term used specifically in leasing to calculate the monthly lease payment. It is a decimal that, when multiplied by the total cost of the equipment, gives you the approximate monthly payment. Unlike an interest rate, which is typically expressed as an annual percentage and compounds over time, the lease rate factor is applied consistently throughout the lease term. Here’s how it works:

• Consistency: The lease rate factor remains the same throughout the lease term, ensuring predictable and stable monthly payments.
• Simplicity: Calculating the monthly lease payment using the lease rate factor is straightforward: simply multiply the total equipment cost by the lease rate factor.
• Transparency: The lease rate factor provides clear visibility into your financial obligations over the lease term.

 

Interest Rate

An interest rate, on the other hand, is commonly used in loan agreements and is expressed as an annual percentage rate (APR). It represents the cost of borrowing money and is typically compounded over the loan term. Key aspects include:

• Compounding: Interest rates compound, meaning you pay interest on the principal amount as well as on accumulated interest, which can increase the total cost over time.
• Variable or Fixed: Interest rates can be either variable, changing over time based on market conditions, or fixed, remaining constant throughout the loan term.
• Calculation Complexity: Calculating loan payments can be more complex due to the compounding nature of interest rates.

 

Key Differences

• Application: The lease rate factor applies directly to equipment leasing, providing a straightforward method to determine monthly payments. In contrast, interest rates apply to loans and involve more complex calculations due to compounding.
• Predictability: Lease rate factors offer predictable payments, with no fluctuations over the lease term. Interest rates can vary, particularly with variable rates, leading to potential changes in payment amounts.
• Cost Transparency: Lease rate factors give a clear view of your fixed payments, whereas interest rates can make the total cost less transparent due to the compounding effect.

 

Why Choose Novatech

Novatech combines an extensive selection of copiers and MFPs from the highest-rated brands in the industry, coupled with incredible leasing options designed to meet diverse business needs. With a commitment to excellence and customer satisfaction, Novatech ensures you gain access to state-of-the-art technology that enhances productivity and efficiency. By selecting Novatech, you not only benefit from top-tier equipment but also receive tailored leasing solutions that offer flexibility, competitive pricing, and comprehensive support throughout the lease term. Explore Novatech’s offerings to discover how the right office technology can drive your business forward.