Leasing equipment allows businesses to control expenses and conserve capital whilst ensuring that they are getting the latest, top quality machinery that is well maintained and safe.
However, before leasing equipment, it is imperative for businesses to ask the right questions. Mpho Modjadji Ngamlane, Industrial Plant Rental account manager for Rand – Air, recommends that companies ask the following:
How well does the company you are leasing the equipment from understand your business?
“Working with a company that understands your market regardless of the service you are looking for is beneficial. In our particular industry, this expands into a deeper understanding of market fluctuations and other influences that impact business as this can affect the desirability and successful outcome of a lease contract,” explains Ngamlane.
What are your needs and requirements for leasing equipment?
“It is important to determine why and what you are using the equipment for. The length of time you will be needing the equipment will also help to establish the appropriate level of investment for a lease,” she says.
What is the process for ending or changing the lease?
“It is possible to enter into a master lease, which facilitates changes in leasing needs and provides companies with maximum flexibility,” says Ngalame.
What is the total lease payments and costs?
“The number of payments, the total monthly payments due and any additional costs associated with insurance, tax and other charges are very important information and asking these questions upfront will avoid any future misunderstandings. We also suggest asking questions about additional costs relating to the lease that may occur during the course of the lease term. This includes late payment fees and other surcharges,” she recommends.
Can I upgrade or add equipment under this lease and how?
Ngalame says that businesses that anticipate future growth should negotiate a clause within their contract to add equipment under the original terms and conditions.
Is it my responsibility if the equipment is damaged?
“You should know your business’s liability and responsibility for the equipment before signing a lease agreement,” states Ngalame.
Do I have any other obligations for the equipment?
“Make sure that these conditions are clear and outlined in your lease agreement. Ask if the company you are leasing from will assume the costs for the equipment’s insurance, maintenance and taxes. It is also suggested that you ask if the company will handle the maintenance and management of the equipment,” says Ngalame.
At the end of the lease, what are the options and are there any extra costs involved?
“Depending on the company that you are renting from, you will have the option of returning the equipment, renewing the lease or purchasing the equipment at a fair market value. “Deciding which option you are going with and specifying this in the original lease is important. Unforeseen fees and costs should be avoided, and therefore knowing the costs that potentially could be incurred are significant,” she concludes.