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Why Equipment Lenders Try to Avoid Repossession from Clients

Posted on in Debt Collection

Chicago debt collection attorney repossession

Leasing is a useful way for businesses to acquire equipment if they do not have the money or see the need to purchase the equipment in full. Equipment vendors and leasing companies charge a monthly fee to lend the equipment to the business, sometimes with the option for the business to purchase the equipment at the end of the lease. As with any lease, the lessor must weigh the likelihood that the lessee will be on time with the payments for the duration of the lease. Unfortunately, a business can be unpredictable, and the client may fall behind on their payments despite good credit history. The terms of the lease may give you, as the lessor, the right to repossess the equipment, but repossession is often not the best option.

Problems with Repossession

There are several reasons why you may want to avoid repossessing equipment if a client is not paying their lease:

  • Repossession is a final step that may hurt or end your business relationship with the client.

  • Paying someone to pick up the equipment and transport it back for you may cost more than the equipment is worth.

  • If you are a leasing company and not the vendor, you may be unsure of what you would do with the equipment once you gain possession of it. Storing it could be costly, and there is no guarantee that another client would want to lease the equipment.

What Can You Do Instead?

The ideal solution when a client falls behind on an equipment lease is to negotiate a deal that the client can afford. If it is a small lease, filing a lawsuit against the client for breach of the lease may not be worth the time or expense. Instead, you should talk to the client about why they have not been making the required payments and whether there is another payment level that they could afford. Renegotiation can help you salvage some money on the lease and possibly preserve your business relationship with the client if you are confident that they will not continue to have trouble paying their lease in the future.

Contact a Chicago Debt Collection Attorney

At Walinski & Associates, P.C., we understand that every loan and lease is an important financial contract that you want to uphold and preserve. Our Illinois debt collection lawyers take an individualized approach to each case because some cases require a more delicate touch. To schedule a consultation, call us today at 312-704-0771.

 

Source:

https://www.nav.com/blog/equipment-leasing-73277/

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