Most organizations that lease equipment expect to return that equipment at end-of- lease. However end-of-lease equipment return is often much more challenging than expected, for some of the following reasons:
- Distributed assets are very hard to track and manage for return.
- Easily accessed assets can be impossible to remove for operational reasons.
- Lease contract terms can make equipment return difficult or impossible.
At end-of-lease, most lease contracts offer limited and expensive options. The way these end-of-lease options are phrased in the legal agreements, and the omission of some key language, can lead to long extensions and high end-of-lease costs. For example:
- Return requirements can make return difficult or impossible.
- Lack of a FMV definition or any buyout option can lead to extensions and renewals as well as expensive buyouts.
- Convoluted notice requirements can produce extensions and renewals.
LPRS experts specialize in reducing end-of-lease costs related to equipment return, and improve the contractual terms, which lead to more reasonable equipment return requirements that are a better fit for a client’s operational and administrative capabilities.
Before committing to an end-of-lease equipment return plan, understand the options defined in your contract. The return provisions as defined in the Master Lease and/or Schedule drive any approach to return.
