$65 to Print a Boarding Pass?
Kevin F. Clune, CLFP
A recent travel experience with a “No Frills” discount airline reminded me of the variety of contract conditions in the leasing industry. The airline ticket was a bargain but there were extra fees for checked luggage, a seat reservation, and even a carry-on bag. The cost was still competitive, however, until I arrived at the airport without a printed boarding pass and learned that one of my bags was 2 lbs. over the limit. At that point, I was shocked to learn that the charge to print a boarding pass and pay for the extra weight was equal to the cost of the original ticket!
It struck me that this might be the perfect analogy to explain the differences that exist from one lease provider to another. Leasing customers who base their decision on the lowest price per month (PPM) may find there are hidden fees and surprise conditions in the contract. On occasion, the Total Cost of the lease with the lowest PPM may exceed that of other lease contracts with a slightly higher PPM.
Whenever customers inform us they have decided to use another leasing company due to a lower PPM, we usually advise them to read the fine print and ask some essential questions.
- What are the end of lease terms and can I get those in writing?
- Will there be extra fees?
- Do you have a late payment grace period?
- Do you charge Interim Rent before the lease starts?
If you decide that you will return the equipment at the end of the lease, some contracts will require that a written notice be sent by certified mail before 90 or 120 days prior to the end of the term. The penalty for failing to comply may result in an automatic renewal of the lease for 6 months or even a year. Also, will you incur additional expenses for packaging and shipping the collateral to the leasing company?
Additionally, extra fees may exceed the estimated savings that influenced the decision in the first place. These could include higher document fees, mandatory insurance coverage that is purchased through the leasing company, and property tax bills and fees.
Late payment penalties could also accumulate quickly due to a short or non-existent grace period along with a zero-tolerance policy. Will it be easy to communicate with the leasing company if you need to challenge these charges? While the issue is under review, will you incur more late fees?
Most leasing companies charge interim rent before the lease starts which normally results in an additional month’s payment by the customer. This results in yet another opportunity for more revenue.
The Discounted Airline knew that I had no other option when I arrived without a printed boarding pass, and that I would pay the price. I was over the proverbial “Barrel”. Let’s hope you can avoid the same predicament with your leasing company by studying the contract before you sign.
Just as airlines are not all alike, neither are leasing companies. I will use a different airline in the future. You have many options…
Choose Wisely,
Kevin F. Clune CLFP
Clune & Company
