What is a lease?
A lease is an agreement to pay for the use of equipment for a specific time period for a specified amount. There are many of advantages to leasing making it an attractive option for a lot of businesses.
Shouldn’t I own the equipment?
It is the use of equipment that generates profits, not ownership!
Who selects the equipment?
You do! There’s full flexibility that you select the equipment and the supplier as well as to barter buying cost.
Doesn’t it cost more to lease?
Leasing can be a practical way to acquire brand new equipment and compares favorably with forms of financing, costing you on the same. That, of course, isn’t a coincidence; the marketplace demands it and leasing rates are established accordingly.
Leasing companies examine what common mortgage rates are and then factor in your interest deduction and depreciation to arrive at what a loan actually costs you; your net after tax cost. Then they set their rates being reasonably competitive and work in reverse, factoring within the higher deductions made available from the lease, to arrive at lease payments that may give you the same estimated net cost. It’s probably much like you analyze and hang up your own prices, you need to be competitive. With 80% coming from all businesses leasing, it cannot cost much more; and understanding that size market they don’t really need to charge a lesser amount of.
Someone who says that leasing at all times is more expensive is equally as wrong anyone who says it at all times is less expensive. The simple truth is it costs you comparable to lease equipment as it can certainly to buy it. Businesses lease for cash flow and other reasons as cited above.
Which one costs more?
To correctly answer that issue you have to review your net-after-tax-cost. The “list price” may well not tell the whole story. Equally a $610 television within an electronics store appears to cost more than the $600 model sitting beside it; if there’s a $10 rebate on it, then its net cost to your account is the same. Not going through the total transaction; websites cost; might “cost” the choice you want to produce. Contrasting leasing and purchasing is incredibly similar.
How is leasing not the same as borrowing from my traditional bank?
By borrowing from a bank or other options for credit, you’re right away reducing your line of credit with that source and thereby removing to be able to draw from those options sometime soon for other company. Also, a bank normally requires a 20% – 25% down payment and could even call for more collateral to secure the money. Leasing provides 100% financing.
Is a down payment required?
No advance payment is required. Most leases could be set up with just the initial and last payment in advance.
Are there any further charges involved with a lease?
Merely the one time credit and documentation processing fee due at the creation of the lease.
What about taxes and insurance coverage?
Most states charge a sales/use tax on the monthly lease payment sum. This sum will probably be added to your monthly invoice from the lease payment. In addition, the county charges a personal property tax within the equipment. We will pay this amount for you and bill you for doing this on an annual or month-to-month basis.
Can I cancel the lease and return the equipment?
In a word, no. The lease is a non-cancelable agreement for the full term on the lease. However, through the term of the lease in case you need to upgrade or add to the equipment, we can structure a fresh lease to suit your needs by fully repaying the existing lease and structuring the latest lease for the total from the payoff and the price of any brand new equipment.
What happens to the equipment towards the end of the lease?
According to the lease structure you decide, you will have the option with the idea to return the equipment, continue the lease at the same monthly rate, or find the equipment for either the fair market price or the amount of purchasing option you negotiated with the inception of the lease. (i.e. $1.00 or 10%)
Who is responsible for taking care of the equipment?
As the lessee you might be liable to take care of the equipment in good operating order so you receive the benefit of all “buyer” guarantees.
Isn’t leasing complicated?
Not at all. Actually, where a bank or traditional lender would need fiscal reports and mounds of documents, most leases could be approved up to $75,000 with simply a credit application.
How can I get a lease?