While leasing credit card terminals and point-of-sale systems may seem attractive because of low upfront costs, such equipment leasing often becomes a costly trap for merchants. If you believe your equipment leases have caused you significant legal or financial challenges, you need a strong defense. Contact Sigal Law Group today for a free consultation.
What is Equipment Leasing
The main issue with equipment leasing for a business is the non-cancellable nature of these contracts. Many merchants sign multi-year leases, typically ranging from 3 to 5 years, without fully understanding the long-term implications. These agreements are often ironclad, leaving little room for early termination without substantial penalties.
The cost of leasing is another major concern. In many cases, merchants end up paying several times the actual value of the equipment over the lease term. For example, a payment processing terminal worth $300 might cost over $3,000 through a lease agreement. This excessive markup is often hidden behind seemingly affordable monthly payments.
Moreover, leasing agreements frequently come with additional fees and charges. These can include insurance fees, tax handling fees, and even charges for “loss and destruction” coverage. These extra charges significantly inflate the overall cost of the lease.
Another issue is the separation of processing and leasing agreements. Many merchants mistakenly believe that canceling their processing service will also terminate their equipment lease. However, these are often separate contracts, leaving merchants obligated to continue lease payments even if they switch processors.
The evergreen clause is another pitfall in many leasing contracts as it automatically renews the lease for an additional term unless the merchant provides notice of cancellation within a specific timeframe. Merchants who miss this window find themselves locked into extended lease terms.
How to Defend Against Equipment Leasing Issues
Unfortunately, courts often uphold the terms of equipment leasing agreements, even when they seem unfair to the merchant. As such, if you are currently engaged in an equipment leasing contract, and you believe the vendor is causing you a significant financial burden, you need a strong defense. Contact our offices today for a free consultation.