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Avoid Scam by an Equipment Financing & Leasing Company

Posted On: July 12, 2017 author Paul Kendall

The process of finding the best equipment financing company for your business needs can be a daunting task, especially if you don’t have a lot of experience within that field. You might be worried that some companies will try and take advantage of you, and your possible lack of experience in using an equipment finance company. However, there are several big scams/problems to look out for when deciding on an equipment finance company. Here are three main ones you should always watch out for:    

1. Evergreen clauses

Watch out for evergreen clauses in your contract! An evergreen clause means that your contract will continue even after it’s original contract expiration - unless you notify the company within a certain time before contract expiration. This means that the finance company can renew your contract for six or twelve months, so that you actually end up paying more than you should for your equipment. They will keep charging you even though you’ve already paid what you owe them and in fact own your equipment. This sounds illegal right? Surprisingly, it is legal in most US states. 


2. Large Upfront Fees

Although it is common for equipment finance companies to ask for a minor deposit, some companies ask for large deposits before getting you approved for financing. They might even ask for several thousand dollars that they will keep if you don’t get approved! Do not fall for this trap! Even though they might claim they need a large amount of money to work on getting you approved for financing, the amount of work it takes to figure this out does not correspond with a huge deposit.  

3. Changing the contract

You should always look out for any changes in your contract. When getting your contract back, make sure to check thoroughly for any changes from the original document. If any changes or modifications appear after you have signed the contract, we strongly recommend that you do not do business with this company at all. However, it can be difficult to spot changes or modifications. If you’re not sure whether any changes have been made to the original contract, there are some online tools that can help you by comparing your documents. Here are a few examples:

1. Adobe Acrobat XI: https://helpx.adobe.com/acrobat/kb/acrobat-downloads.html
2. Group Docs. Free trial at: http://groupdocs.com/ 
3. Work Share. Free trial at: http://www.workshare.com/

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