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5 Ways Companies Impose Unfavorable Pro Rata Terms

In a lease agreement contract, "pro rata" is a way to calculate the rent or charges when they apply for only part of a month. It means that you pay or charge for just the portion of time that you actually use the property, rather than paying for the whole month when you may only be using it for part of the month.

For example, if you move into an apartment on the 15th of the month, the landlord might calculate your rent on a pro rata basis. This means you'd only pay for the 15 days you're living there that month, instead of the full month's rent.

So, in simple terms, pro rata in a lease agreement is a fair way to figure out how much rent or fees you owe or are owed when you're not using the property for the entire rental period. It helps make sure you only pay for the time you actually spend in the place. Some equipment leasing companies may abuse the concept of "pro rata" in contracts to take advantage of lessees or customers. Here are a few ways they might do this:

  1. Opaque Calculation Methods: The leasing company might use complicated or unclear methods to calculate pro rata charges. This can make it difficult for customers to understand how their charges are being computed, potentially leading to overcharges.

  2. Excessive Pro Rata Fees: They could charge unreasonably high pro rata fees. While pro rata charges are meant to be fair, some companies may use this as an opportunity to make extra money, especially if the customer needs to terminate the lease early.

  3. Hidden Clauses: In some cases, equipment leasing companies may bury pro rata-related terms in fine print or obscure sections of the contract. This makes it easy for them to impose unfavorable pro rata terms when it's time to terminate the lease or make changes.

  4. Strict Enforcement: Some leasing companies might rigidly enforce pro rata clauses without considering individual circumstances. For example, if you need to return the equipment a few days early, they might insist on charging a full pro rata amount for the entire month.

  5. Lack of Flexibility: Some leasing companies may lack flexibility when it comes to adjusting pro rata charges in response to legitimate customer needs or unforeseen circumstances.

To protect yourself from potential abuse of pro rata in equipment leasing contracts, it's essential to thoroughly review the contract before signing and negotiate terms that are fair and reasonable. If something in the contract is unclear or seems unfair, seek legal advice or ask for clarification from the leasing company. Additionally, maintain good records and communications with the leasing company to document any issues or disputes that may arise during the lease term. Save money on your next equipment lease or financing with CoreTech! Already have a lease contract? Use our lease cost analyzer at no cost for an agreement analysis to review and potentially reveal overcharges, unjust fees, impossible conditions, onerous clauses, and automatic extensions. Contact today to get started!


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