When a Lease is chosen over a purchase should the monthly lease cost stay the same after the capital is paid off or should it be adjusted?

I’m a little cranky today ...... I spent all day cleaning out my garage from all the flooding. What a job !!!!!

Anyway, let me answer it with a question.

If you leased a car .... and had made payments enough that the car had been paid for ........ would they adjust your payment ?

Thanks Debbie, That is a good point.

Are your leased plants guaranteed?

If after several years your car starts look a little shabby and worn, or doesn’t drive quite as well, is the lease company going to replace it for you?

How long does one normally lease a car for? And do you lease a vehicle till it’s completely paid for?

Regardless of the situation when buying a motor vehicle, our lease charges are PERPETUAL.

Leases are only entered into if the client also selects full-service with replacement. Amortization and interest are calculated on the value of the containers and accessories only (at a rate that satisfies us) -- amortization rate assumes that we will need to replace these items over some period of time (5 yrs?). Interest and replacement of living materials are built into our service charge, assuming that the plants will be under continuous replacement -- this part of the service fee is essentially an amortization.

Ownership of all leased materials remains with us forever. The client is purchasing the benefits, not the goods.

HTH, Carl

To Trevor: the difference between leasing a car and leasing the garden-variety interior plant is that a car will have a significant residual value at the end of the two- or three-year lease term...a plant and its decorative container will not be worth very much after two years and will possibly have to be replaced at some point during the initial term of the lease.

To Carl: Barb Helfman schooled me in leases with her TOPTactics course years ago...according to my notes from that course, plants may be exchanged for other plants of equal value at any time during the initial term of the lease, but the customer may not opt to switch decorative containers during that time (2-3 year initial term). She also stressed two vital points about the "unpleasant" side of the biz: if the client wishes to terminate the lease early (i.e., before the completion of the agreed-upon initial term when the costs of the leased items are being amortized), they must buyout the cost of the leased items; and be sure to insert a legally-binding forfeiture clause in all leases. This enables you to legally re-take possession of your plants and containers if the client should default on their obligations to you. You may not get paid the delinquent sum, but at least you’ll be able to go into their premises legally to repossess the goods.

Clem

I must disagree with whoever said that the value is not there at the end of the lease. First off ......... over 95% of leases that I have done have "self renewed" at the end of the 3 years per my contrtact. After the initial three years they can cancel at any time with no buyout. I do minimum three year leases unless they want to pay really big dollars ...... though, I already get big dollars for a 3 year lease. When I have taken plants out .... I resell them. I have a lot of clients who have a lot of employees and I will pull up and (with my contacts permission) tell everyone that I know buys plants that I have some for sale. They know already that they are personal plants and MUST be taken home. I sell them for a little over wholesale .... they are after all used and the containers may show some wear (darn janitors and those runaway vacuums). I have always sold them all within visiting 2-3 clients. Done. My client that leased them paid for them years ago, and now I just made more. I usually always offer the plants first to the employees of the company I took them out of.

I also sell my old plants for just about what the replacement is going to cost. That is called lunch money for a few weeks.

Oh, and at 40,000 miles a year ........ I’ve never leased a vehicle in my life.

Debbie

Clem, you have a great memory. Bet you even saved the Notebook that was part of the seminar. Debbie, correcto on the resale potential of well cared for, off-lease items. Don, you too. Absolutely correct. Ah, Leasing. My third favorite word in the English language (what is it in Espanol?) Anyway, leasing is the absolutely best way to make $$ in this biz. I prefer a three year lease but I don’t mind a yearly lease IF it automatically renews each year as per your contract. Always get it in writing. Going back to the "good old days",originally almost all interiorscape business was what we called "leases" (Gerry Leider called his company Tropical Plant RENTAL, not Tropical Plant we -will-sell-you the plants and planters and charge for service") but was really "rental" with the client never owning the stuff. Perpetual recapture of dollars and then on and on. Just a few tips: Never put the lease factor alone on billing but add it to the service fee for guaranteed maintenance and submit it as a one line item. After Year two or three or whatever, IF the client requests a lower charge you could reduce the monthly fee somewhat but I wouldn’t get rid of the lease factor completely and go down to a G/M fee alone. Think of the lease factor component as "wiggle room" IF it is neccessary to compete against a hostile bid. Leases are golden both for regular plant service contracts and Holiday.
Sounds like we need to continue Pricing Seminars at future meetings. Yes? No? Meanwhile, it is Post Holiday and I look forward to seeing a bunch of you at TPIE (awesome seminar) and at the PIA/Helfman Seminar at the Dallas Mart on How to Buy Holiday on Jan. 21st. Now get out there and get ’em Tiger. Barb

Aunt Barb,

I love leases too. Thank to you and your Toptactis course a long time ago I feel that I am doing it right.

Wanted to pick your brain however. Last summer, I had a copier company that wanted us to do their home office. They wanted a lease to own similiar to what they offered their clients.

I talked them out of this; however, I was wondering if anyone else has ever done one of these before.

John,We do these lease to own agreemaents with some regularity.They are not as lucrative as a lease (rental),but are better than a sale/maintenance arrangement.You become the bank,so like any bank be sure to charge a resonable % rate for what is a high risk loan.Remember tht if the client defaults you have very little recourse.We try to run these contracts over 5 years and sell an upgrade at the end,making it similar to a standard lease.Make sure that your contract is clear that you retain ownership of all the product untill the lease is paid in full.There is no credit for partial payment.That clause will encourage your client to live out the full lease.
Good Luck

Why can’t this be simple?

A rental is a rental (not a lease).

We’re plant people, not bankers.

Leasing and rental is the SAME THING!

Kelly:

Not Really. I lease covers a longer period, generally 12 months or longer. A rental may be one,two or three days, however generally not longer than a month or two. A lease should have all types of legal clauses and/or a contract. A rental generally does not have as many legal clauses and generally doesn’t involve a contract.
Rick W