- Who can lease?
- Why should I lease?
- What is a lease and how is it different from borrowing from a bank?
- What financial or credit information is necessary?
- Can I stop the lease and return the equipment?
- How are leasing payments determined?
- What factors are used to determine credit worthiness?
- What about sales tax?
- How is leasing different from renting?
- What is required to qualify for a lease?
- How long is the approval process?
- How much of an initial cash outlay is required?
- Are there any purchase options at the end of the lease?
- What equipment can be leased?
- When do my lease payments begin?
- Are there tax advantages to leasing?
- What terms are available?
- Can I include soft costs in a lease?
- What is the interest rate in this lease?
- What should I do if I have problems with the equipment that I leased?
- Why did you request my personal guaranty?
- What is the Documentation Fee?
- Why am I required to insure my leased equipment?
- What happens at the end of the lease term?
Any individual, sole proprietorship, partnership, corporation (including non-profit corporations) or trust may be a lessee under a lease agreement. With certain exceptions and restrictions, even the federal government, a state, a county, a school board or a municipality, as well as foreign individuals and entities, may be a lessee under a lease. Leasing Resources, Inc. will not lease equipment to an individual for personal use.
Leasing offers many advantages over any other type of financing. Leasing will not deplete financial resources like paying cash. Leasing offers 100% financing, unlike a bank loan that will usually require a 20% down payment. There are also tax benefits to leasing the will save you money. Leasing allows most businesses the opportunity to acquire revenue generating equipment, and match cash inflows and outflows, essentially letting the equipment pay for itself.
A Lease is a rental agreement for a specific period. Because you’re paying for the use of the equipment, it’s a business expense. As a business expense, it’s usually a tax-deductible item. Your accountant or tax advisor is the best authority on how to treat this in your specific situation. If you borrow money from a bank or other source to buy the equipment, you immediately reduce your credit line with that source. A bank often requires a 20-25% down payment and may require additional collateral – a lease doesn’t.
For leases under $100,000, we usually need only a standard lease application. Sometimes we’ll have additional questions or need clarification on certain things. If we do, we’ll call and let you know. For leases over $100,000, we need an application and two years financial statements + interim statements. If you don’t have this information, or if your accountant doesn’t review it, you may substitute tax returns. Feel free to call us for details. We’ll be happy to talk to you.
The lease is non-cancelable. However, if you need to upgrade to larger or newer equipment, we’ll structure a new lease for the upgrade. If you have a need to terminate the lease, we’ll figure a buyout for you. You could then either pay the buyout and ship the equipment back, or pay the buyout plus the purchase option and keep the equipment.
The monthly payment is based on the term of the lease, cost of the equipment, and the credit of the lessee. The initial term of a lease runs from 12 to 60 months.
1. Length of time in business. 2. Financial condition of business. 3. Trade and secured debt references. 4. Dunn & Bradstreet (D & B) report. 5. Credit Bureau ratings.
In most states and some local jurisdictions, the lessor is required to pay a use tax on each monthly payment. Since the lease payment was calculated in advance, and tax rates change from time-to-time, this amount is billed separately. In certain states, the full amount of taxes is due at the inception of the lease. In these situations, the tax is added to the equipment cost to calculate the monthly payment. Many states also charge an annual tax on tangible personal property. Since the lessor is the legal owner of the equipment, we are required to pay this tax. We pass this cost on to you, spread over 12 monthly payments.
While there are several differences between leasing and renting, leasing gives you the added flexibility by giving you the option to purchase the equipment, return it, or renew the lease.
An easy one-page application is usually all that is needed for leases up to $100,000. Additional financial information will be required on leases above $100,000.
Decisions are usually accomplished in less than 24 hours, depending on the size of the transaction and that accuracy of the information provided. If we need additional information we will contact you.
Usually, the first and last month's payment, and a document processing fee. Leases with relatively higher risks for the lessor may require additional security. Additional security could take the form of advance rentals, a pledge of assets, a bank letter of credit, or a down payment.
A $1 Purchase Option lease allows you to purchase the equipment at the end of the lease for the nominal charge of $1. Fair Market Value or "FMV" lease allows you to use the equipment for the term of the lease, and then either return or purchase the equipment or extend the lease term. The purchase option is based on the Fair Market Value of the equipment at the end of the lease term. A 10% Purchase Option lease allows you to purchase the equipment at the end of the lease term for 10% of the original equipment cost or renew the lease.
All new or used tangible property subject to depreciation (i.e., which remains useful after the year it was purchased) used in a trade or business, or held for the production of income can be leased. Some examples are:
- cars, trucks, tractors, and trailers
- construction equipment
- aircraft (both fixed wing and helicopters)
- machine tools and industrial equipment
- telecommunications systems and related equipment
- computer systems and data processing equipment
- broadcasting and CATV equipment
- furniture, fixtures and office equipment
- medical equipment
- electronics equipment
- printing equipment
After the lessor confirms that the equipment has been delivered and they have received all of the required documents, your equipment supplier is paid. Your lease contract will begin and an invoice is sent to you for the first payment. Included on the first invoice is a charge for interim rent which covers the period between when we pay your vendor and when the first lease payment is due.
Leasing provides a more rapid write-off because the lease term is shorter than the depreciable life of the equipment, and the monthly payments are often 100% tax deductible as a pre-tax business expense. Consult your tax advisor for more detailed information.
Leasing Resources offers lease terms of 12, 24, 36, 48, and 60 months. Other options and customized terms are available to qualified applicants.
Leasing Resources will finance 100% of the soft costs — up to 20% of the total amount being financed. This may include software, freight, installation, maintenance, and training.
Since you are leasing and not taking out a bank loan to finance your purchase, there is no "interest rate" as we usually think of one. It's more like leasing office space. You're paying to rent the equipment, with the monthly payment amount based on the type of leasing plan you choose, the terms of the lease, and the cost of the equipment
As an owner/shareholder of a closely held business, we view you and the business as one. Your guarantee confirms your commitment to your business and tells us that you will stand behind its obligations.
Leasing Resources, Inc. does not charge an application fee. We do, however, charge a nominal fee to compensate us for processing the lease documents, and reimburse us for the fees incurred with filing UCC-1 financing statements that may be required in your state.
Since the equipment is owned by the lessor and the lease is for its use, the lessor must ensure that if the equipment is destroyed or stolen, our lease will be paid off from the proceeds of the insurance policy. Most commercial policies cover leased equipment; all you need to do is have your insurance agent forward us an endorsement at no cost to you.
Unless you have chosen one of our fixed purchase option plans, you are responsible for returning the equipment in good working condition within 30 days of your last payment due date. If you do not return the equipment, you will be billed on a monthly basis. If you chose a fixed purchase option, you must exercise your rights within 30 days of the last payment due date.