Assume My Copier Lease....What?

Fisher:

The assumption process is one that I've seen leasing companies do from time to time. You have to get the blessing of the leasing company first, and credit approval for the new leasee.

How does this square with the fine print on every lease doc I've ever read regarding assignment or transferring the lease by the lessee???  Who goes to jail if the lease doesn't get satisfied????

@Kitz: Dealer support is also a great question. Currently we approach this on a case-by-case basis. New transfers would go to an affiliated partner in the geographical territory that is qualified to service that equipment. Ultimately, we are building a network of independent dealers not unlike what the direct channel already has access to. This way, independent dealers can leverage the network for new contracts as well, such as when a sale is made to a head office that includes installations in other cities. 

My questions to you guys: would you view a new lease assumption as a new potential customer or as a lost hardware sale? Is the segment of buyers looking for lease assumptions (price sensitive, looking for short-term contracts) a traditionally high-margin segment for you? How do you typically help these customers? 

Our assumption is that it's more valuable to help a high-margin customer upgrade early than it is to make a low-margin sale to a price-sensitive customer in the lower segment. In this way, Un-Lease would allow your low-segment customers to indirectly finance the purchases of your high-margin customers by making it easier for those high value customers to buy repeatedly. 

Thanks for all of your questions and comments! To answer the first question by @AOSGROUP, we've had some success in our local area of Toronto, Canada. The transactions were completed manually before launching the marketplace. The current version of the marketplace was only launched this past January, so you guys are the early adopters. 

Transactions can take the form of either a lease assumption (where one credit-approved client assumes the lease of another as-is), or a split-buyout (where the 'seller' buys out their contract and then sells it to the buyer in one transaction). Leasing professionals I've spoken to have also said that contracts can be modified to account for partial payments and then re-leased. Ultimately, we would like to work with leasing companies to automate this process for our customers as much as possible. 

@Kitz and @Kiwispike you bring up some excellent points. The core idea of Un-Lease is that the seller's lack of satisfactory options (pay full buyout or roll lease into a new contract) is leveraged to get them off the hook for some of their debt while getting the price-sensitive buyer a deal. Therefore, all transaction fees (including moving costs, setup costs, Un-Lease fee) are paid by the seller. 

A seller is asking for more than market rate for a piece of equipment will not be able to find a buyer and will end up paying anyway because they're still responsible for making lease payments. It's up to the seller to decide how much of a hit they're willing to take, and trade that off against how fast they want to sell it. For that reason, I set the expectation with sellers that they will recover 50-60% of their BOP (not including any previous refinancing) after all fees. Almost all sellers have so far accepted that without blinking, because they know that 50-60% is a lot better than nothing. 

Any refinancing or "air" from a previous deal must be squared off by the seller. No buyer will want to shoulder another's debt. That means that Un-Lease cannot help those customers who are underwater from being refinanced several times unless they can come up with a big cash payment. Ultimately, with an efficient marketplace Un-Lease may be able to eliminate the need for refinancing altogether. What do you guys think about refinancing? Would you consider Un-Lease an alternative? 

I agree when the market rate is above what you can buy it for, however, but you just never know. Recently we had the Sandy disaster here in NJ.  Many companies moved in for one or two years to help with the rebuilding process.  They would be viable candidates to assume a lease that may have 12-30 payments on it.

Or how about a business that just moves into town and they have no clue as to what their needs will be for a system in two years. Why commit to a 36, 48 or 60 month term?  We see it over and over where a company took a longer term lease and then had to downsize the lease or even upgrade the lease and those companies end of paying through the nose.

Using and promoting Un-Lease can provide added value to your customers and future customers.

Thanx for all of the comments.  Rob will be on soon and add some additional comments for the other threads.

Art

Tried this recently but haven't found anyone to take it up, issue I have had is often the remaining lease is above the market rates at the time. But its a fantastic concept.

Seems simple and I would guess most of questions such as shipping of equipment, fee's for shipping, dealer support in the area unit is transfered etc. can all be answered?

I love the idea!  I've tried this in the past with Kijiji or Craig's List with little success.  I was wondering if you had any stats that this worked or that the leases were successfully transferred?  Thanks!