Coffee machine lease - what happens at end?

[Dahu371]

We have a lease on a coffee machine. It's with Siemens Financial Services and the contract states that it's a "hire agreement regulated by the consumer credit act 1974". It's a fixed period of 3 years, payment quarterly. I'm trying to work out what happens at the end.

The contract states that it's their machine throughout. As far as I can see the only part about what happens at the end says that when we stop hiring the equipment we must return it to Siemens at a place they choose in the UK.

After nearly three years usage the machine is getting a bit tatty and I can't imagine that they really want it. What usually happens here? Do they ask for it back? Can I expect a letter offering to sell it to us?

Leases always confuse me for some reason...

 

The first thing you need to do is terminate the lease in writing.

This will trigger a conversation (perhaps with your broker if one was involved) as to what your secondary options are.

Normally you will be able to get title for (about) 2 monthly payments; perhaps less.

 

[andygambles]

Leases always confuse me for some reason...

It means you do not own it and must take reasonable care of it and servicing etc depending on your lease contract.

If the hire agreement is regulated by the consumer credit act then it sounds to me like it is a personal lease rather than a business lease.

Usually at the end of the lease you have three options. Negotiate with the supplier to purchase it. This can be desirable if there has been excessive wear and tear beyond what the supplier would expect. In most cases they wont even inspect the equipment and just agree a price to sell it to you.

Extend the lease either on a rolling basis or a new fixed term. Some suppliers wont do this.

The other option is to return it. This can mean an inspection by the supplier who may charge for repairs or replacements beyond reasonable wear and tear.

 

[TotallySport]

We have a lease on a coffee machine. It's with Siemens Financial Services and the contract states that it's a "hire agreement regulated by the consumer credit act 1974". It's a fixed period of 3 years, payment quarterly. I'm trying to work out what happens at the end.

The contract states that it's their machine throughout. As far as I can see the only part about what happens at the end says that when we stop hiring the equipment we must return it to Siemens at a place they choose in the UK.

After nearly three years usage the machine is getting a bit tatty and I can't imagine that they really want it. What usually happens here? Do they ask for it back? Can I expect a letter offering to sell it to us?

Leases always confuse me for some reason...

it all depends on the terms of the lease, and there are certain tax implications based on how it is setup, talk to the finance company and your accountant.

Normally when the lease runs out its time to get a new coffee machine anyway, so do you really want to keep it.

 

[Dahu371]

If the hire agreement is regulated by the consumer credit act then it sounds to me like it is a personal lease rather than a business lease.

Must admit I thought this odd too, but the agreement is definitely in the name of the business.

I called Siemens (don't know why I didn't do this in the first place to be honest!). They said that at the expiry of the agreement the machine reverts back to the original supplier.

So that's fine, I'll get in touch with the supplier and find out what they want for it. Just wondering what this type of lease is called though - sounds like a finance lease to me - would this be correct?

 

Must admit I thought this odd too, but the agreement is definitely in the name of the business.

I called Siemens (don't know why I didn't do this in the first place to be honest!). They said that at the expiry of the agreement the machine reverts back to the original supplier.

So that's fine, I'll get in touch with the supplier and find out what they want for it. Just wondering what this type of lease is called though - sounds like a finance lease to me - would this be correct?

It is almost certainly a finance lease. The 'regulated' bit would apply (at the time you took out the lease) to partnerships where the value of rentals was less than £25K. As in my original post, remember to cancel in writing 3 month before the end of the lease.