What is one equipment leasing scam or problem to look out for and avoid?
To help you know what equipment leasing scams or problems to look out for, we asked CEOs and business owners this question for their best advice. From changing the contract to large upfront payments, there are several scams and problems that you may have to take note of when leasing equipment for your business.
Here are six equipment leasing scams or problems to look out for :
- Changing The Contract
- Charging You for Damage You Didn’t Cause
- Advance Fee Scams
- Approval Scams
- Blanket Lease
- Large Upfront Payment
Changing The Contract
You need to look out for changing the contract equipment leasing scam and avoid it. This is completely illegal as there have been various reports in recent years of equipment leasing companies offering a $1 purchase option (implying after you’ve made all the payments, you own the equipment for $1, or maybe sometimes for $100). Then send back the contract with a 10% or FMV option and anticipate you won’t notice, which means, at the end of the contract, to retain the equipment, you need to settle for a check for 10% or more of the actual loan amount. However, you can identify the contract changes after uploading the original document on the Diffdoc tool.
Caroline Lee, CocoSign
Charging You for Damage You Didn’t Cause
One scam is to charge users additional fees for damage done to equipment that they didn’t cause. This scam isn’t always a scam–sometimes it’s an honest mistake. Equipment leasers, whether it’s tech, cars, or other equipment, identify damage inconsistently and end up charging the wrong customer. For that reason, it’s vital you perform a prompt assessment of all equipment you’re leasing, and with time-stamped photos on your smartphone, document any damage found.
Rob Bartlett, WTFast
Advance Fee Scams
One equipment leasing scam to watch out for are advance fee scams. This is a common scam type across many mediums, wherein the company asks for a deposit before the individual is “approved,” then never approves them and keeps the deposit. Often the company will claim ignorance or say the fee has already been processed when confronted. No legitimate company will ever just keep the money like that.
Sasha Ramani, MPOWER Financing
Companies often send over approvals asking for the first and final payments before that contract has even been approved. When this happens there is normally fine print in the “approval” that says this initial payment is an “earned fee” even if the client ends up not following through with the deal at all. Small business owners should be wary about approval contracts and although lawyers can be expensive, having a legal professional look over these types of contracts may end up saving them money in the long run.
David Ring, MCT – Trading
A common scam in the equipment leasing industry is when a lessor offers you a “blanket lease.” This type of lease agreement supposedly allows you to use any equipment that the lessor has available without having to sign a new lease for each piece of equipment. However, once you start using the equipment, the lessor will come back and try to sell you separate leases for each piece of equipment. And since these additional leases usually have much higher interest rates and shorter terms than the original blanket lease, you can pay a lot more money in the long run.
Gino Louise Reichert, LSAT Prep Hero
Large Upfront Payment
One common equipment leasing scam is when a lessee is asked to make a large upfront payment for the equipment lease. This payment is often non-refundable, even if the equipment is never delivered or is not as described. To avoid this scam, always ask for a refundable deposit and be sure to get the equipment in writing before making any payments.
Admir Salcinovic, Pricelisto