What is Equipment Leasing?
An equipment lease is a non-cancelable financing contract between you and a leasing company. It requires you to make financing payments for a fixed period of usually four to five years. It can end up costing quite a bit, so if you haven’t signed a contract yet, it’s worth understanding exactly what equipment leasing will cost you.
You’ve likely heard the "Why rent when you can own" pitch – and we agree
This saying is very true in payment processing. Here’s why. Equipment leases are expensive. A $29 per month lease that lasts for 60 months adds up to $1,800, plus the buyout fee! That's a lot of money for a terminal that’s worth only a few hundred dollars. Depending on which terminal you use, you can buy it outright for one quarter to one half of the cost of leasing, and that’s not even including the buyout fee.
So why do processors try to sell you on equipment leasing?
Processors and merchant brokers receive a large up-front payment from the leasing company that makes up the majority of their commission structure. This means that equipment leases are in the best interests of the processor and the merchant broker reps – not in your best interests as a merchant.
How is Helcim different?
We never lock our merchants into equipment leases. All our terminals are offered for purchase at a competitive price. In Canada, you also have the option to rent a terminal for a competitive month-to-month fee, which gives you the ability to upgrade, downgrade, exchange and return your equipment without any penalty. You don’t have to worry about being locked into a contract that expires in 48 months – or the penalty of breaking it.
What if I’m already in an equipment leasing contract?
Many contracts last between 48 and 60 months. They can be hard to break – though not impossible. However, you may have to wait until your leasing contract ends to make a move to a new processor.
If your equipment rental is part of a merchant services agreement with your bank, it may be possible to get out of it.