Equipment Leasing Services
Seeking out reputable equipment leasing services can be a wise move for companies that wish to conserve working capital and stretch corporate budgets. The high cost of needed equipment can stop many companies in their tracks. Finding a creative solution to this expensive problem can mean the difference between success and failure for many organizations. With leasing, the up front cost of machinery is handled by a third party. This third party will actually own the machinery and will make it available to companies for a monthly fee. This means that the lessee will be able to hang on to important working capital while still having access to the tools and machinery that will allow them to function and earn profits. Companies that choose this option will need to show that they have good credit and can be trusted to take care of the equipment and make regular and timely payments. In addition, as pieces of machinery go out of date, the lessee is not stuck with obsolete items. A simple lease update will deal with this issue. This fact alone makes working with equipment leasing services a very cost effective way to do business. Of course, it is important to negotiate the terms of the lease in a way that makes continual updates possible. Additionally, there are certain tax implications that are associated with these leases, so it is important to consult a financial professional before signing any contracts.
The kinds of items that are generally available from equipment leasing services can include anything from forklifts to copiers. Office furnishings and business technology are widely available as well. An array of industrial machinery can also be leased. There are also lessors who offer machinery and other items that pertain to a specific profession or area of industry. In addition to conserving working capital, companies can keep credit lines available by leasing. These two features alone can mean that a company will realize profits that would not have been available had the leased items been purchased. Many start up companies can have severely limited budgets and equipment leasing services can free up those tight budgets and help get the new business off the ground. Even if a company can come up with the large down payment that is required to make an outright purchase of needed equipment, the monthly payments are likely to be very high. The payments on a lease will generally be much more affordable and the terms of the lease will tend to stretch over a longer period of time than most loans. Since cash is not tied up in machinery, it remains an available asset for the company. Purchasing machinery can be a real budget buster. Obtaining this machinery through a lease may be the only way to function within a given budget.
Most equipment leasing services will offer a variety of lease options. Some of the options that a company might be able to choose from could include fair market value options, fixed purchase and buy out options, seasonal payment plans, step payment plans, or ninety day deferred payment plans. Choosing a fair market value option means that the lessee has the option to either return the machinery at the end of a lease or purchase it at a fair market value. A fixed purchase option is similar to the fair market value option. The main difference between these two is that a cap is set on the buy out price. Seasonal payment options allow companies to gear lease payments around the times of the year that are more profitable, making the lease payments easier to afford at a given time. With the ninety day deferred plan, as the name implies, a first time lessee can defer lease payments for ninety days. Most equipment leasing services will also offer a step payment plan. These plans are tailored to the needs of the lessee and allow the upfront payments to be relatively small and grow higher across the life of the lease. It is also important to check a lease provider's references before entering into an agreement. This can be done by contacting prior customers and asking them about their experiences with the company. Most reputable providers will make a list of past and current customers available to potential clients.
There can be beneficial tax implications associated with working with equipment leasing services. In some cases, a lessee can claim lease payments as tax deductions. Since such tax benefits are at stake, a smart business owner will have an accountant go over a lease contract before signing to make sure that these tax benefits apply if possible. Finding solutions to challenging business problems can mean the difference between success and failure for many companies. The Bible tells believers to have faith and courage as they trust in God. Be of good courage, and he shall strengthen your heart, all ye that hope in the Lord. (Psalm 31:24)
When selecting equipment leasing services, there are a few things to keep in mind. What is the reputation of the company? How long has the service been in existence? Are company representatives knowledgeable on the machinery and equipment that the potential lessee is interested in? Does the service offer a wide variety of inventory and options? Obtaining bids from a variety of service may be a good idea and can help to insure the best price and lease features. Whatever choice a company might make when taking out a lease, careful research and comparison will usually mean obtaining the best available terms.
Equipment Leasing BrokerInterestingly, 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.