Equipment lease financing is very beneficial to businesses, especially to those who are in a financially tight position and to those who operate in a rapidly changing technological environment. In leasing, business organizations won't have to purchase the business critical equipment, they just need to pay a monthly rental fee to the leasing firm to use it.
All types of equipment from major manufacturing equipment to smaller items, such as computers can be leased from lenders like banks, finance companies, bona fide business equipment/office equipment leasing companies, equipment manufacturers or retailers.
Tips for getting the right deal
1) Find the Right Leasing Partner
As you will be dealing with the leasing company for a long time and it is the question of your business critical assets, take great care in choosing the right leasing firm. This way you will be able to save time and avoid later problems because of a substandard lease. Look for a business equipment or office equipment leasing company who are experienced, have good reputation, are in good financial shape, and have a relationship approach to the business.
2) Choose the Right Lease
When choosing the right lease give utmost attention to details like lease pricing, lease flexibility, balance sheet considerations, equipment obsolescence, the anticipated period of equipment usage and your firm's credit status. This analysis will help you arrive at the right decision with regard to the type of lease most beneficial to your business and finances. The lease types you can choose from are a capital lease, finance lease or operating lease.
3) Opt for short End-of-lease Notice and Renewal Periods
Usually the notice period ranges from one to six months. And if proper notice is not served, automatic renewal kicks in which can last from one month to 6 months. You can opt for short notice and automatic renewal periods to avoid paying unintended lease charges.
4) Minimize Interim Rent
Interim rent is the amount paid to the leasing firm for using the equipment between the equipment acceptance and lease start dates. You can opt for delivery and acceptance towards the end of the month as the first day of the month is usually the official start day for leasing firms. In case you fail to do so, you can request a limit on interim rent.
5) Make sure that Lease Term and Projected Equipment Use match
This is important because your lease might run out before your project is over resulting in extra expenses and disruption in work or idle leased equipment for which you have to keep paying. This might also result in premature surrender of the lease which itself will attract penalties. So be very careful in determining your requirements and the expected period of use when deciding the lease period.
6) Identify and Understand All Potential Fees
Leasing proposals are replete with a myriad of fees and penalties such as commitment fees; non-use fees or facility fees, per schedule documentation charges, attorney fees, penalty charges for late rental payments, early lease termination charges etc. You can save a significant amount of money if you can prove yourself to be a good potential customer on the basis of your financial position, market position etc. So understand all the inherent fees and charges and negotiate hard. Remember that if you are a strong candidate there are numerous business equipment/office equipment leasing companies in the market.