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Should I Lease a Credit Card Terminal?

Should you lease a credit card terminal? Well, probably not. Read on to learn the differences between leasing and buying and to find out about the one time that we can recommend a credit card terminal(s) lease.

Before committing to leasing or purchasing a credit card terminal, there are a few factors which you should consider. In general, buying equipment up-front is the most cost efficient. In some situations, however, leasing may be preferable.

Most Independent Sales Organizations use outside leasing companies to finance credit card processing equipment. Many of these organizations employ independent contractors (sales people) who make a profit off of the commission from your lease contract. This means that, after you sign the lease, the contractor will be unlikely to provide you with any further service, as they have already generated a profit from you. There is a company behind the account, but if you moved, or opened, a merchant account due to the local sales person, be sure they have a stake in keeping you happy as a customer. If they earn a one time commission, you will want to be sure you are happy with the company that the sales person represents.

Most Leases are non-cancelable. Car leases are written in much the same fashion as such Third Party Leases. In other words, even if you return the terminal early, you are still required to make payments on the lease contract. In addition, leasing companies often waive responsibility for equipment malfunctions or replacements, and very rarely provide any sort of warranty. If you are going to lease, be sure that the lease includes a terminal replacement program at no additional cost.

Leases can be costly: Do The Math: In general, a lease payment will cost far more in the long run than an up-front purchase. For example, if you pay $39 a month for a terminal over 48 months, it will cost you $1,872 over the term of the lease. This is before the company's "buy out" price is added in. If purchasing this terminal initially would have cost you between $150-$800 (depending on the equipment you purchase), you will be over-paying for your equipment by a large margin.

Keep Track of Your Agreement Terms: Many merchants do not keep close track of their lease records and will continue to make monthly lease payments after the lease is up. A lease company might not notify you that the lease has expired and could instead continue to charge you, or even extend your lease without your knowledge. Keep track of your lease agreement, and be sure to notify the lease company of your intent to cancel or buy at least 60 days before your lease ends.

When Does Leasing Make Sense: There is one scenario where we feel it can make sense to lease your equipment. If you are a business who has multiple terminals (such as a grocery or larger restaurant), your equipment costs can be rather significant. If your merchant account provider does not offer a free terminal program, the up front cost can be too much to bear for a new venture, or a business with tight cash flow. In that case, a lease might make sense. You can be fully equipped with your credit card processing hardware with little to nothing out of pocket. If you do decide to lease for this reason DO THE MATH. Be sure that there isn't too much profit included in the lease contract. Simply multiply your payment by the number of months on the lease. There should be a reasonable profit for the sales person and for the lease company since they are covering the cost of your equipment up front.

Ask Questions: One of the most vital questions to ask who researching buying or leasing opportunities is: "Can I use this equipment with any credit card processor?" If the answer is no, you could end up paying hundreds of dollars for a terminal you will be unable to use should you change providers. Even if you purchase new equipment, you will still be held to the terms of your lease agreements. In order to avoid hazards, ask as many questions as possible about policies and options. Inquire as to whether the company has a "same as cash" option which will allow you to spread your payments out for 3-6 months without penalty of interest. If the salesperson is adamant about leasing you equipment, be cautious! they are likely only seeking commission. If you are already in a lease, and unsure of the termination dates, call your leasing company and request a copy of your lease. By most state laws, lease companies are required to send you a copy of your agreement within thirty days.

Please note: ServiceRelated.com would be happy to review all options with you. Call us today at 888-445-6447 or fill out the following "merchant account quote request" form for a quote on your businesses credit card processing rates..

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