Equipment leasing scams aren't always easy to spot. You can’t expect an illegitimate leasing company to come at you like a Nigerian letter fraud campaign. They’re much more subtle than that, and far more successful. You may be saying to yourself that this business is pretty straightforward; how could anyone get scammed when there are so few variables in the mix? You’d be surprised.
All it takes is one wrong move to cause massive issues, and we don’t want that to happen to you. That’s why we’re going to help you with the process and give you some key things to look out for. Make sure you never end up losing your hard-earned funds to the snake oil salesmen from some fraudulant equipment financing company.
Do your research
When picking a company to lease from, it never hurts to Google them at the very least. Customer complaints are the easiest thing to look for. Some people are just never satisfied, but when you see the same complaint come up more than once, consider tossing this prospect on the trash heap.
Also, check their website for customer reviews, especially quotes. Then check those customer’s sites. If they seem legitimate, then this company likely is as well.
Who should I trust?
The Better Business Bureau is a great place to begin your search for more in-depth customer reviews. There are other websites, of course, and your search should be extensive enough to extinguish any doubts. One great tip— check to see if they’re registered with the National Equipment Financing Association or a related entity. This means they’re at least recognized as part of the industry and not just the current pretty face of a serial scamming company.
It doesn’t hurt to ask around on the forums of local review websites. Most users who set up a profile are pretty active and will get back to you within a day or two. One site that gets overlooked when researching a business is Glassdoor. Although it’s mostly used to review employers, a company’s internal practices may be a sign that their outside dealings are affected by the same negative management style. If there’s problems, chances are someone will have raised a stink.
Remember that equipment leasing is not as closely regulated as some more publicly recognized industries. It’s up to you to do the research and vet prospects thoroughly. Once you’ve found a business that checks out (and if you’re reading this article, then you have) that’s one step down. You’re ready to take a look at what they have to offer.
Be an expert on the machines you need
Equipment leasing companies will already know a heck of a lot about their trade. If you’re specifically looking for tow truck equipment financing – then make sure you find a leasing company that has experience with that equipment. Even if you’ve determined that it's an accredited business and completely trustworthy, you should still know what you want and do some research beforehand.
Choosing a model that’s inherently more expensive? That’s essentially on you. Like with the leasing company itself, make sure to do your homework. You can choose rigs or machines that are cheaper based on your needs. If you don’t need it, don’t go for a one-size-fits-all top line product if all you need is a truck that does one simple task. In fact, the right leasing company will find a way to lease your equipment whether it’s new or used.
Older machines can be much cheaper than a brand new model. Should you take a thorough look under the hood? Every time, whether new or used. Should you discredit a model simply based on age? Of course not! And neither should the firm you’re leasing from. Some salespeople may want you to go in for brand new equipment, because they’ll claim it’s far superior and skim a higher interest rate off the top. This is an absurd way to look at your options, and they know it.
The more control you have over which equipment you’re getting, the more cash you can save in the long run. In general, go for an equipment financing company that makes you an active participant in the selection process, whether it’s embroidery equipment or boom trucks. You have more to lose than they do, and more to gain. Don’t forget that.
Interest rates and upfront deposits
This is where you can really get swindled. Keep an eye on the contract and how your interest rates behave over time. Remember that an equipment lease tends not to work like a typical loan. The numbers are displayed (and advertised) as a monthly payment, not an annual rate (APR). Even though you expect the lease to behave like a mortgage or a car loan, it doesn’t. What you expect to be paying at the end could be wildly underestimated.
In other words? Do the math. Scammers will try to sell you on a lease with a lower interest rate, but how they charge you is more complicated than that. Usually their fee on a contract-by-contract basis is very reasonable. Shell out a little cash now, and you’ll save thousands later. If you’re in dire straits, luckily there are good guys in the business who will make sure you understand the whole process before putting ink to paper.
Some equipment financing companies will ask for a deposit upfront. This isn’t unusual. It ensures that you don’t take the machine they paid for and hop the border with it. But don’t give them a single penny until you know that your lease was approved and you’ve got signed documentation on it.
If they claim that you need to make some sort of hefty processing fee, ask them why or tell them to put it in the contract and you’ll pay it when approval has gone through. Upfront deposits aren’t really admissible until you have something in writing. Otherwise they could deny approval and run off with the money. Then they hop the border. We don’t want anyone swindling anybody. That’s why good lenders should always wait until the contract is approved and signed before asking for payment.
Why are scams so successful?
You normally expect them to be in pretty obvious places like when you read an email from a less than reputable source or see an advertisement on a pretty sleazy website. But smart scammers stay out of the shadows and masquerade as a convincingly legitimate enterprise. This can snag even the savviest people in their net.
Keep your eyes peeled. Do your research and utilize your resources. Most importantly, remember that scams happen but the vast majority of companies have your best interests at heart and favor repeat business over one-time wins. We can say from experience that securing a lease for someone’s startup screen printing company and seeing the look of joy on their face— that’s why we got into this business.