In my territory I have seen many competitive sales people use Step Leases to make quick, high profit sales.
Typically, they will find a customer who is paying say $200.00 for a Black only copier. They will quickly offer to replace it with a new colour copier for $125.00 per month x66 with a Large prepaid copy block and many free cases of paper.
The customer thinks it is a great deal and signs.
The sales person does not clearly inform the customer that in usually the 36th month, their payments will "step up" to say $375.00 per month.
If the customer objects, the sales person says that as long as you keep renewing with me every 36 months, your payments will always remain the same. Of course, they do not say that the back end liability keeps getting bigger.
Sometimes companies have a seperate Purchasing Dept from Accounts Payable. The Accounts Payable checks to make sure that the first $125.00 payment is correct and pays the invoice. In Leasing, once the client makes that first payment, they are considered to be in full knowledge and acceptance of the transaction.
The customer can complain and threaten all they want about the new $375.00 payment but there is generally no escaping this liability.
Sometimes Leasing companies will call a new customer to confirm the copier is indeed on site but they usually do not discuss the Step Lease.
Step Leases are usually agreed to on a Side Letter which is outside of the standard lease document.
I often encounter these clients in my sales calls. Sometimes they have horrendous Balance of Payments, many times the value of the copier, with the current copier working unreliably. All I can do is offer to flip them into a new copier, at reasonable market prices, including the Balance of Payments in my new quote.
It is these kinds of competitive sales reps who give honest Copier sales reps in my territory a bad reputation.
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