Are you currently in the market for packaging equipment leasing for your business? Then you probably
already know that it can be a little overwhelming at first trying to find the best packaging equipment
leasing company to work alongside with.
From finding the best equipment financing rates to identifying the most reputable equipment financing companies to get packaging equipment leasing from, there’s a lot that goes into finding the perfect financing partner. But today, we’ll help you spot packaging equipment leasing mistakes that could cost your organization quite a bit of money so that you can narrow down your search.
Avoid These 5 Costly Packaging Equipment Leasing Mistakes
1. Not Investigating References & Financial Conditions of a Potential Lessor
Take into consideration the types of businesses you would want to work with when your car breaks down or something in your home falls apart. Do you want to just trust anyone?
Of course not: you want to find a reputable company that not only charges fairly but is actually capable of delivering the service they promise. Unfortunately, promises are just fancy words that a business might use to grab your attention.
Just because a business makes a claim that they’re “the best,” or that they can handle any challenge doesn’t mean that they actually can. When shopping around for packaging equipment leasing, you want to check in with any available references you can find about the company.
What do other customers think of the service they provide? What’s their current financial situation?
If the business you’re considering working with doesn’t have any reviews or any way to check in and see how they’re doing, then that can be a red flag. For example, if a financing business is currently not in financially great shape, then why would you want to invest your time and resources into that business?
2. Jumping on the “Best” or “Most Affordable” Rate You Find
Just because an offer seems great doesn’t mean that it’s a legitimate offer. It’s not uncommon for some businesses to promote their packaging equipment leasing, but use sneaky marketing strategies to grab your attention.
While they may promise certain rates or unbeatable packaging equipment leasing, it may actually cost you more money than some of the other offers you didn’t want to consider.
Some sneaky businesses will promise a certain rate, but completely disregard letting you know that those rates are only for approved customers. In other words, you’ll probably need near-perfect financial statements before they’ll consider offering you that rate they “offered” to you.
Anytime an offer seems too good to be true, make sure to take the time to really dive in and see whether or not the numbers add up. They might add up for someone, but that someone might not be you.
Taking the extra time to investigate can be the difference between a great deal for your business and a very costly one.
3. Blindly Agreeing to a Proposed Lease Agreement
Always, always, always look at a proposed lease agreement for packaging equipment leasing, no matter if you “trust” the financier you’re partnering with. Every time an agreement comes in is an opportunity for a financier to make a change without you realizing.
This isn’t something you have to worry about with reputable, honest packaging equipment leasing companies, but unless you know the equipment financing industry very well, chances are you don’t yet know which ones are reputable and trustworthy.
So when a new lease agreement comes through your door, take the time to thoroughly review the agreement to ensure that nothing’s changed. If you’re going to put your name down on the dotted line, make sure that you know with 100% certainty what you’re signing up for.
If you didn’t read the full agreement before you sign, you could potentially be signing up for a costly packaging equipment leasing deal. So make sure that you take the time to review any lease agreement before signing.
Here's a short list of things to look out for on your equipment financing and equipment leasing agreements.
- The buy out: Know if you're signing up for a fair market value buy out, $1 buyout, 10% residual buy out or no residual buyout with an equipment financing agreement.
- Hidden charges: Look out for pre funding interest and interim rent charges. These charges can be very costly to your business. These charges can be avoided if you know about them up front.
- Upfront fees: Make sure you're not over charged for doc fees. Depending on your deal size, whether it's a titledvehicle or not and if you're adding additional collateral or not. Should be less than $1,000 and as low as $0
4. Not Understanding (or Completely Ignoring) End-of- Lease Notice Deadlines
Some agreements will require the lessee to notify the lessor of your decision to return equipment at the end of the lease. If you don’t, you could end up paying a bunch of money you normally wouldn’t have to.
This happens in packaging equipment leasing, due to the way fair market value buyout agreements are set up: if you don’t
notify the lessor within an agreed upon time frame, the lease may go through a “renewal period” of up to 12 months.
If you wanted to return your equipment at the end of the lease, then you need to make sure that you notify the lessor within the agreed upon time frame. Usually you have to do it 90 days before the buy out date. Forget to do this and you’ll end up leasing the equipment for even longer than you intended. I suggest as soon as you know your intentions what you're going to do at the end of the lease, put it in writing and mail it to the lessor.
And if you don’t actually need the equipment, then you’re essentially paying for something you don’t need. And that’s a costly expense you could have avoided!
5. Overlooking the Amount of Time You Need to Close a Lease
When you’re factoring in the need for packaging equipment leasing, you need to also consider the amount of time that it will take to go from the initial lease planning stage to the actual completion of the leasing process.
Each step that you go through not only takes time, but in some cases can result in extra documentation and fees. If you rush the entire process, it can cause unnecessary errors.
You may think that you’ll be saving money in the long run by finishing the packaging equipment leasing process done in less time, but if there’s an error, it can result in it taking even more time than necessary. And when something takes longer than it needs to, that can translate directly to revenue being lost towards documentation and other avoidable costs.
This is especially important for large ticket equipment leasing requests and for transactions that have a larger number of people and “hoops to jump through.”
Rather than rushing through the packaging equipment leasing process, set some time aside to plan ahead and know exactly what you’re getting into. Talk with your industrial equipment leasing company in advance to learn about everything you need to get into place before starting the process.
Have questions about packaging equipment leasing and want to know how you can go about getting financing for packaging equipment without going through these costly mistakes? Give Trust Capital a call at 866-458-4777 and we’ll be happy to help you get packaging equipment leasing without the fear of losing money unnecessarily.