Credit Card Terminal Leasing – Good Idea or Bad?
My opinion is – bad idea.
The main reason to not lease merchant account terminals is that you are upside down before the ink is dry on your lease agreement. For example: a $39 lease for 48 months will cost over $1,800. The brand new terminal may be worth $400 or $600 but within months it rapidly depreciates to used equipment prices of $300 or less, but you still owe $1,700. Ouch!
The next reason is leases often automatically renew and contain a buyout clause at the end
of the term that must be acted upon to terminate the agreement. Watch out for a fair market buyout clause. Fair market is vague, but even if it is capped at 15% of the original lease, in four years you may end up paying as much as the equipment would cost new.
I could give you a few more reasons to not lease credit card terminals but do you really need any more? Besides, I have a much better option; if you already have a merchant account request a rate review. If your account meets certain guidelines I am able to provide a free terminal, including free shipping and as always, NO CANCELLATION PENALTY.
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[...] 1. Watch out for credit card terminal leases – if you go this rout it will help your short term cash flow but the terminal will end up costing you 400% – 600% more than if you just purchased the terminal. For more information see this article. [...]