Make sure you read Flexirent operating-lease terms and conditions carefully before you sign.

Graham Allardice is one of our members. In December 2007 he decided to lease a laptop for his business on a 24-month Flexirent operating-lease contract. Flexirent claims it deals only with other businesses and not consumers.

3 months before the contract expired, Flexirent got in touch and asked whether Graham wanted to upgrade to a new laptop or buy the leased one. Graham decided to buy the laptop, which would become his if he made 3 further payments.

Overpayments

But several months after what Graham thought was the last payment in February 2010 he discovered that payments were still coming out of his account. He called Flexirent and was told it would be "looked into". He heard nothing back, although the payments finally stopped on 9 August.

He called again to enquire about getting his extra payments back and was told that he had signed a lease agreement, that the lease was still in operation (because he hadn’t explicitly cancelled it), and that the payments had been stopped out of "good faith".

Flexirent returned Graham’s overpayments. But how can a situation like this arise?

The onus is on you

Flexirent told us it endeavours to contact a customer before the lease term is due to end (so if you’re a customer it's vital to keep your contact details up-to-date). But the onus is on you to get in touch once your lease term is ended. Otherwise, Flexirent will assume a continued lease is in place if you still hold the equipment.

We think Flexirent should have recorded that Graham had ended the lease by buying the laptop with the 3 extra payments he made. Graham’s contract stated: “If you do nothing, or fail to give us notice … this lease will continue on a monthly basis”. But Graham did give Flexirent notice – by making that initial decision to buy the leased laptop rather than upgrading to a new one when Flexirent contacted him. He also didn’t need to explicitly inform the company that the lease was ended, after he’d made his final payment. Graham telling Flexirent that he was choosing the buy option did that.

Lease agreements are designed for businesses – and small-business owners need to watch for catches in the terms and conditions. Flexirent, for example, has 4 options when the lease ends: make sure you know how the one you’ve chosen works.

We say

• As a small-business owner, you might be tempted to lease from Flexirent. Make sure you carefully read the terms and conditions of your contract before signing it. Once you’ve signed, the contract is binding.
• Keep a record of the date your lease term is due to end. Then tell Flexirent in writing it has ended – if you don’t, it could cost you hundreds of dollars in overpayments.
• In our view the Flexirent terms and conditions that cover ending a lease are unfair – particularly for small-business owners.

What’s an operating lease?
Operating leases are where you rent equipment for a set term rather than buying it outright. The payments include interest – which means you pay more for the equipment than its purchase price. But because you don’t own the equipment, if you’re a business you can claim the payments as part of your (tax-deductible) operating expenses.

More from consumer.org.nz

• Unfair contracts - we think consumers need protection from unfair terms and conditions.
• Consumer law reform - delays are leaving Kiwis worse off than Aussies.

Got a question or comment on this topic? Share your views and experiences with other Consumer members...