Frequently Asked Questions

WHAT ARE THE ADVANTAGES OF LEASING?


Protects against obsolescence

Provides 100% financing

Provides fixed rate financing for the full term

Conserves working capital

Does not impact bank credit lines

Establishes new credit lines

Off balance sheet financing improves financial ratios

Tax advantage: 100% of monthly lease payment can be expensed

WHO CAN LEASE?
· Any business: corporation, partnership, or proprietorship with an established business checking account, trade references and credit history. An individual cannot lease for personal use.

WHO OWNS THE EQUIPMENT?
· Title is held by the lessor until lessee exercises his purchase option.

WHAT ARE THE INITIAL COSTS TO ESTABLISH A LEASE?
· Leases provide 100% financing with no down payment. Usually only the first and last payments are required.

HOW ARE THE MONTHLY PAYMENTS DETERMINED?
· Multiply equipment cost by the appropriate rate factor for the term desired.

HOW DOES A BUSINESS QUALIFY FOR A LEASE?
· Credit worthiness is determined by: 1. Time in business 2. Satisfactory bank and trade references 3. Satisfactory credit reports 4. Financial statements if equipment cost exceeds $75,000.

IS THE LEASE CANCELLABLE?
· No, not for the initial term. However, it is possible to prepay the lease, upgrade, or add on.

WHAT HAPPENS TO THE EQUIPMENT AT THE END OF THE LEASE?
· The lessee can purchase the equipment for $1.00, 10% of the original cost, or Fair Market Value depending on the plan selected at the beginning of the lease term.

WHO SERVICES THE LEASED EQUIPMENT?
· The lessee is responsible for maintaining the equipment. Usually, the originating vendor will insure the customer has all the benefits of the manufacturer's warranties or maintenance contracts when applicable.

WHO PAYS THE SALES TAX?
· The equipment cost is not taxed, only the monthly payment which the lessor will collect monthly. It is usually based on the lessee's local sales tax rate.

WHAT ABOUT INSURANCE?
· The equipment is insured by the lessee and is usually covered under his contents coverage or a special rider.

WHAT ARE THE TAX BENEFITS OF LEASING?
· The lessee's accountant should determine the best tax treatment for his client.

HOW DOES LEASING AFFECT THE LESSEE'S BANK LINE?
· It doesn't. Established bank lines remain unaffected and are left intact for business expansion or day-to-day operating capital.