I do not recommend equipment leases for most businesses. Here is why, and what to do if you are already in one.
How terminal leases usually work
The lease is often with a separate leasing company, not your processor. Terms commonly run three to four years, and many card terminal leases cannot be cancelled early. You keep paying until the end, even if the terminal sits in a drawer.
Why it can cost far more than buying
Add up every monthly payment over the full term, then compare that number to what the same terminal costs to buy outright. With many leases, the total is several times the price of the machine. Add any insurance or service fees billed with the lease, and the gap grows.
Some leases also end with a buyout payment if you want to keep the equipment, or require you to return it.
Why it can follow you after you switch
Because the lease is a separate contract, switching processors does not end it. Many owners switch to save money on processing and then find they are still making lease payments for a terminal they no longer use.
If you already have a lease, check these
- Who the lease is with. Look for the leasing company's name on your bank statement or lease paperwork.
- How many payments are left, and the monthly amount.
- Whether there is an early payoff option, and what it costs.
- Whether there are extra charges, like insurance or service fees, billed with the payment.
- What happens at the end: do you own it, return it, or pay a buyout?
- Whether your current terminal can be reprogrammed if you switch processors, so you are not paying for two.
Better options
Buying a terminal outright usually costs less over time. In some cases equipment can be provided with an account, but remember that nothing in processing is free: provided equipment is paid back somewhere, usually through pricing or agreement terms. Whatever the option, you should know the total cost before you sign.
Not sure what you are paying for?
Send me your processing statement and any lease paperwork. I will show you what the lease is really costing, what is left on it, and what your options are, including whether your current equipment can keep working if you switch.
This guide is general information. Lease terms vary, so read your own lease agreement for the exact terms.