EddScott

At work we have a telephone system that when first installed was to cost us £5000 over 5 years. Plus we pay £250 per year maintenance.

The agreement is due to finish in August of this year. The company in question has asked if we would like our calls through them as well. If this is the case, they are also asking us to complete another lease agreement for another 5 years at the same cost.

What I don't understand is that surely after 5 years the equipment is now ours and we should only need to pay the maintenance contract. Why put a price on something of £5K but then carry on paying another £5K when one lease agreement ends. Do we never actually own the equipment?

Seems quite odd and I'm not getting much sense out of the salesperson either. Anyone have an idea about leasing and how it works?

Thanks

Gordo

Depends on whether it was a finance lease (i.e. hire purchase - you own the assets at the end of the lease-term) or an operating lease (you're merely renting the equipment).

Sounds like it was probably a finance lease - these are normally dearer and have the maintenance cost built in - unlikely to be charged for maintenance on an operating lease.

Check your original lease document - what did it say would happen at the end of the period? It should be pretty clear from that whether you own the equipment or not. If it's an operating lease, you should now be paying a lot less for equipment that a) they've already paid for, b) is now old kit (i.e. not latest technology) and c) will cost them money to either remove or to walk away from.

Find out the facts (from the original douments) and fight your corner - feels like an annual maintenance contract to me and ask them to tender for your call costs along with 2 or 3 other suppliers.

Good luck!
Gordo

pbee

does this company also do photocopiers ?.

check your lease, and remember if you do own it you can get someone else to do the maintenance work on it.

Diablo

If its old kit and on an operating lease basis, at the very least you should be on a secondary rental term with nominal monthly payments.

Phone them up and tell them to collect their kit - you'll see a change of attitude then