GovWire

1. If you are happy with your current lease or equipment arrangements, it may be more cost effective to consider extending the lease rather than signing a new one.
2. Know what your requirements are and ensure you do not pay for features you do not need.
3. Remember to take your time, a genuine supplier will work with you to make sure your needs are met.
4. Do not add a settlement cost to a new lease.
5. Always ask the supplier to provide the proposal in writing to show what was agreed.
6. Do not sign any paperwork until you have the written proposal from the supplier and you have understood the commitments.
7. Do not be rushed into signing anything there could be expensive long-term consequences.
8. If your supplier is unwilling to provide any information you ask for, this is a good indicator not to proceed with them.

Start with what the school needs:

• make a list of the features you will need from the equipment
• be aware of how often you might use the equipment, for example, if you are leasing a photocopier, you will need to know how many black and white copies, or colour copies are made each year

Compare leasing with buying

For some schools, buying outright could work out better in the long run. Compare the cost of buying the equipment with leasing, consider:

• any discounted prices
• prices excluding VAT
• the cost of maintenance

Costs of leasing

Consider what costs are involved, including:

• the total cost of the equipment excluding VAT by adding up the monthly payments and money paid upfront
• the level of discount youre getting against the manufacturers recommended retail price (MRRP), discounts should not be less than 60% as dealers can pay as little as 20% to buy the equipment. You can typically get 70% to 80% discount using the Crown Commercial Services framework
• if software updates are required and what costs are involved
• any documentation fees
• any annual facility fees
• the service cost, this is usually fixed for the lifetime of the agreement
• the cost of any existing leases that needs to be settled (you cannot add a settlement cost to a new lease as it can involve interest on that sum over the new lease period, which becomes a finance lease, and this could represent borrowings which are not allowed under DfE rules without permission get advice from your auditor)

Types of leases

If you choose to lease your equipment, you can only enter into an operating lease. Financial leases are often poor value so make sure you always follow your schools procurement rules.

Youll need to know:

• the expected useful life of the equipment and how long you want to keep it
• whos responsible for maintaining the equipment and the cost of this
• whos responsible for insuring the equipment, and what liability would be incurred if the equipment is lost, stolen, damaged, or destroyed

Fixed term agreements finish at the end of the term. If you need to end an agreement early or want to renew, youll need to be aware of:

• options for renewal, what the terms are and how to do this
• what youll need to do when the lease comes to an end and if there are any costs
• whos responsible for returning or disposing the assets at the end of the lease
• the residual value of the equipment you could consider negotiating a new lease based on this value for a shorter 12 to 24 month term, provided that it still meets your needs (the cost of the service agreement could increase slightly as the machine will be older)
• any costs or penalties incurred to end the lease early and how to do this
• any notice that needs to be given at the end of the primary lease period without penalty, or what happens if notice is not given you can give notice as soon as the lease is signed to prevent it from running longer than needed

Before the agreement is signed make sure:

• you have a fixed term lease agreement and a separate service agreement so that you can see the true costs of each these should be signed at the same time
• the length of both the agreements is for a maximum of 3 years
• you understand the minimum lease period, this is the shortest period that the school will have to make rental payments for the equipment, and is fixed regardless of changes to the schools needs
• if youre being offered a minimum term agreement, negotiate for it to be fixed at an agreed term and sign or initial the alteration, as agreements like these can require 6 months written notice to terminate or it can continue to run, sometimes indefinitely
• youve asked someone else to look over it,
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