Office Equipment Leasing: What You Need to Know About Automatic Renewals?

Are you thinking of leasing or buying equipment for your business? The answer to your question will depend on your decision and analysis as a business owner. You must determine which among the two is cost-effective in starting a business.  You cannot start a business without proper tools or equipment. If you’re starting a business with limited capital or savings and require upgraded equipment or tools every year leasing would be the best option for you. Buying equipment would be perfect if your business is well established and for longer usage which only requires proper maintenance. 

As time went by, business opportunities are rising across the globe because of the current situation. Business opportunities boom from services, small businesses, and job opportunities to online business. Business owners always choose the option for the benefit of their business. That’s why in putting up a business, office equipment leasing is an option to consider for cost-saving and convenience purposes. 

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Being a business owner you must be aware of the possible risk you may encounter along the way. In this matter, decision-making is important in setting up a business. In terms of office equipment leasing, equipment leasing must undergo an agreement process to ensure that both sides go through the negotiation process before it creates conflict. The best response to this is having automatic renewals for equipment. This article is for business owners interested in leasing office equipment.

Advantages of Leasing Equipment:

  1. Cost-effective – At first, leasing requires fewer expenses, and production equipment at a low cost. 
  2. Flexibility – Leasing equipment allows the owner to have ample time to purchase equipment especially when you don’t have enough capital.
  3. Upgradable Equipment – Leasing allows you to upgrade equipment suitable for your business in a budget-friendly manner.

Disadvantages of Leasing Equipment:

  1. Higher Cost – Yes, leasing produces an overall higher cost.  Leased items became more expensive than purchased ones since the leased equipment contains additional profit. In this matter, Purchasing equipment is a good idea.
  2. Ownership – Though you are using the equipment you cannot deny the fact that you don’t own it. This will serve as a disadvantage to you.
  3. Least term obligation – As business owner, you don’t just own business but you pay also to run the business. You have the responsibility of paying for the least equipment until the end of the contract agreement.  Monthly expenses and payments are involved.

Automatic Renewal

Automatic Renewal is an important factor to consider when leasing equipment, it simply modifies, extends, or renews the period of leasing. In the business field, contracts were made to address the legal obligation of the owner and establish relationships between two parties which made the agreement effective. Automatic Renewals contain a set of terms and conditions that are made between two parties. The owner and the tenant must be aware of their obligations and rights.

In some cases, Automatic Renewal can be a burden especially to business owners and consumers because it will result in purchasing equipment they don’t need. Also, a lot of processes are involved in order for it to be legal and well planned.

Lease Agreement Clause

A lease agreement clause is a significant part of a business rental that will serve as an agreement between the leasing company and the business owner.  The automatic Renewal Agreement Clause is simply the process of renewing a contract for another term of leasing to prevent termination of a contract, if the contract is canceled before the end date of the agreement penalty for the individual will be charged.

Three Major Parts of  automatic renewal 

  1. Automatic Renewal Term Length
  • The automatic renewal time length of terms could be 4 months, 8 months, or more than a year.
  1. Notice Period
  • No renewal happened, the period where the notice is submitted to finish the leasing of equipment off services, 60 days before the end of the agreement.
  1. Equipment Return Period
  • In this period all the equipment leased will be sent back to the owner at the end of the leasing agreement.