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Quick Reference |
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| How does Leasing Work? |
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| 1. Select the equipment | |
| 2. Complete a credit application | |
| 3. Lesser issues a credit approval once the credit is approved | |
| 4. Lesser purchases the equipment and leases it to your company for a monthly rental payment | |
| 5. Upon expiration of the lease, you have the option to purchase, release, replace or return the equipment. | |
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How does Leasing Benefit My Business? |
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| Leases tend to be more flexible than loans | |
| Leasing allows more timely equipment acquisition | |
| Leasing provides the benefits of ownership without the expense of ownership | |
| Lower up-front investment | |
| Monthly payments can be structured with flexible payment options | |
| Predictable fixed payment plan - no variable rates | |
| Preserves line of credit for other business uses | |
| Higher-quality equipment is affordable | |
| Qualifying is easier with a lease | |
| Tax advantages | |
| Installation, sales tax and freight can be included in the lease | |
| Minimize working capital usage | |
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Equipment Leasing |
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| What is a Lease? | |||||
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A lease is simply an agreement by a
customer (Lessee) to make a monthly payment for a specific
amount of time for the right to use property owned by Lesser
(funding source). The Lessee is responsible for insurance,
maintenance, and all other cost of ownership. At the end of
the lease there are equipment purchase options available.
The resale value (residual value) of
the equipment at the end of the lease term is taken into
account in the pricing of most leases. A higher residual
value at the end of the lease usually means a lower monthly
rental payment. |
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| Why Should I Lease? | |||||
| 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 that 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. | |||||
| Who can Lease? | |||||
| Any new or established company. | |||||
| What is required to qualify for a Lease? | |||||
| An easy one page application is usually all that is needed for leases up to $150,000. Additional financial information will be required on leases above $150,000. | |||||
| How long is the approval process? | |||||
| Approvals are usually accomplished in less than 24-hours hours, depending on the size of the transaction and the accuracy of the information provided. | |||||
| How much cash is required up front? | |||||
| Usually, 1st and last month's payment and a document processing fee; however, Danckaert will pay the documentation fee for you. | |||||
| Are there any purchase options at the end of the Lease? | |||||
| $1.00 Buy-Out Options Plan | |||||
| For those who are fairly certain they wish to purchase the equipment at the end of the lease term, this is the recommended plan. At the end of the lease term, the equipment is simply purchased for $1.00. | |||||
| 10% Purchase Option Plan | |||||
| This plan offers the lessee a fixed purchase option at the end of the lease. At the lease end, the customer can extend the term of the lease, return the equipment or buy it at 10% of the original equipment cost. | |||||
| Flexible terms are offered also | |||||
| Step Payment Plans | |||||
| 60- & 90-day Deferred Payment Plans | |||||
| Early Buyout Option | |||||
| Capped Fair Market Value Option Lease (CAP) | |||||
| Fixed Purchase Option | |||||
| Rental Programs | |||||
| Tax Leases | |||||
| What equipment can be Leased? | |||||
| All new and pre-owned equipment, software, installation and delivery charges, tooling and training. Peripheral equipment can be included (i.e. dust collection systems). In addition a prepaid maintenance service contract can be included. Later, trade-up equipment can be incorporated through lease add-on features. | |||||
| When do my Lease payments begin? | |||||
| Once you have received all of the equipment you ordered and it has been properly installed, you execute delivery and acceptance certificate and you receive a bill for your first lease payment in 30 days, you will be invoiced thereafter. | |||||
| Are there tax advantages to Leasing? | |||||
| 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. | |||||
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| Reasons Why Leasing Is More Advantageous Than Traditional Borrowing Or Purchasing With Cash | |||||
| Leasing Does not Deplete Working Capital | |||||
| Preserve your cash to maintain business flexibility .Leasing allows a revenue generating piece of equipment to pay for itself out of cash flow as it is generated, simply put it matches cash outlays with cash inflows. | |||||
| Avoid Dilution of Ownership Equity | |||||
| It is better to lease equipment than dilute ownership in the company through equity financing. | |||||
| Attractive Payment Schedules are More Flexible than Conventional Loans | |||||
| Leasing allows you to utilize revenue producing equipment with less money paid out each month. You have more money to grow your business and can finance 100% of the lease transaction versus typical bank loan requiring a minimum of 20% down payment. | |||||
| Minimize Risk of Owning Obsolete Equipment | |||||
| You have the flexibility to upgrade or add on as technology changes, through lease modifications. Leases can be structured providing you the option of buying the equipment at the end of the lease term. | |||||
