Equipment Leasing Broker
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Interestingly, the equipment leasing broker profession is prospering. In fact, government sources indicate that it's the sixth fastest growing industry in the United States today. And God's will is for his people to prosper. "Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth." (3 John 2) Basically, a broker facilitates leasing contracts between a lender and a person or company. The type of products that can be leased with these arrangments is virtually limitless. Forklifts, computers, phones and communications systems, office furniture, and copiers, are just a few examples of products that can be leased. However, this type of financing doesn't start at the low end of the money market. In fact, most of these types of leases start at around $5,000 and can reach into the hundreds of thousands of dollars. An equipment leasing broker works with financing companies, banks, manufactures, and retailers to secure the best deal for his or her client based on need, credit, and ability to pay. In other words, the broker is an intermediary between the user and the lender.
Benefits abound for all parties involved in a leasing arrangement. One of the main perks for a person is that a lease allows a them to get much needed equipment without having to put out large amounts of cash up front. A third party funding source purchases the products a person or business needs, and makes it available in exchange for regular payments, which are made over a contracted period of time. Bad credit usually won't work for these types of arranges because, just like a traditional bank loan, a person or company needs to have good credit and be able prove the ability to repay the lender. The equipment leasing broker will work to get the client the best possible deal, which should include no substantial down payment and minimal upfront costs in the form of one or two advance payments. This frees up company assets for other projects. A second benefit to a person or company, is that leasing helps prevent equipment from becoming obsolete. Normally, leasing agreements are structured to last for the duration of the expected useful life of the product. For example, a person leases a network of computers for a specified period of 18 months, and once that term expires, he or she turns the computers back over to the lender and then rents the most modern system available. Contract terms are negotiable and can be designed to best suit the person or company. This is where the equipment leasing broker earns his pay. A broker's job is get the client the best deal, at the best cost, and at the most competitive interest rates. For his or her effort, a fee equal to approximately three to five percent about the interest rate is earned.
A third benefit is that leasing expenses might be fully tax deductable. Furniture, phones, computers, copiers, and forklifts are hard assets and are generally available to be leased because they can be easily repossessed, if the loan goes into default. On the other hand, financing for soft assets such as software is not usually available. During the process of preparing applications and paperwork, the equipment leasing broker should explain the difference between the two common financing options: finance and true. The finance option works best if a company intends to keep the equipment when the term expires. Arrangements can be made to purchase the equipment for a nominal fee, which should be specified in the contract. Since these contracts are usually designed to last the duration of the equipment's life, the lender sees little value in retaining ownership.
The second financing option available to an equipment leasing broker is what's called a true lease. These types of arrangements are not designed to last the entire life of the product. So, at the end of the lease, a company can choose one of several options. It many walk away from the lease or purchase the equipment at its fair market value. True leases generally carry lower payments than finance leases. Several payment options are available to choose from. A skip lease allows a company to skip payments during certain months of the year when business slows down. This option works best for seasonal enterprises that are affected by recreational or agricultural cycles. Next, is the step-up lease, which assumes that a business will be able to handle higher payments as the term progresses. Finally, there is the deferred lease option. A lease might be as short as 6 months or as long as 10 years. The equipment leasing broker should also help clients choose from the variety of options available to them for the end of a lease. Equipment may be turned in, renewed, purchased at a predetermined price, or purchased at fair market value.
After determining a client's needs, the equipment leasing broker takes the applications to the banks and financial service companies most likely to accept the funding request. Keep in mind that brokers are not franchises, they are independent business owners. Salaries vary. Actual income depends entirely on how hard a broker is willing to work at attracting and retaining clients. Although brokers should take every precaution to ensure that clients are capable of honoring their debts, they shouldn't worry because most leases are what are referred to as non-recourse agreements, which means that if a person or company fails to make payments, the lender can't seek compensation from the broker. Currently, many states do not require a license to act as a broker. Check with individual states concerning regulations. Formal training is available which can cost thousands of dollars. And an association exists to assist brokers.
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