We just chatted with a business owner, who once loved her prior processor. The key phrase is “once loved” because we just helped her do the math on her equipment lease. Her old processor “helped” her out with a low monthly lease payment of $44 a month; which she has been happily paying for the past 10 years. Her processor has billed her a total of $5280 in payments for a credit card terminal we sold 10 years ago for $499. Can you hear the love leave the room?
At Total Merchant Concepts, we rarely recommend leases. Every once in a blue moon, an attorney or CPA can make the fiscal case for a small business to sign a lease for a credit card terminal. But in most cases, leasing does not make financial sense- let's look at the options:
- Option One – Low monthly payment for 36 or 48 months which equates to paying for the terminal multiple times
- Option Two – let’s call this the TMC way – invest in a reasonably priced terminal up front and pocket the long term savings over option #1
A few items to remember about leasing:
- Check and double check the buyout at the end of the lease. Just like leasing a car, you have to return the equipment after your initial lease term. If you want to keep the terminal, you typically need to make additional payments or 'buyout' the lease.
- Leasing typically does not extend the warranty. Again, just like with a leased car; if the terminal breaks you will have to pay to have it fixed. It is not a rental. Many leasing companies will add on additional monthly fees for extended warranties or imply warranties that do not actually exist- so read the fine print.
- The leasing company is under no obligation to let you know when your term is up. Like our client from today, they will let you pay for 10 years (or more) if you let them- so know the term if you are in a lease and set an alarm to call and close it down on time.
For more tips on leasing – check out our web page here.
If you have questions about leasing a credit card terminal; please call us. We would love to help you do the math to make the best decision for your business or organization.