Everybody must have come across the term “leasing,” in one context or another. Take, for example, leasing a car. If we wish to drive a car that we can’t afford to buy or wish to change the car often, say every three years, then leasing the car is the best option.

When a company is short on cash but needs equipment, it can lease it. The owner buys the equipment with a loan and then rents it to a company for a fixed monthly fee. All kinds of equipment, like medical or transportation equipment, can be leased. There are different companies specializing in leasing such equipment.

Should my company lease or buy the equipment?

One has to consider different parameters before making the decision about leasing or buying the equipment. The most important consideration is the financial aspect. If we wish to buy the equipment, are we going to get the necessary credit? The equipment might be prohibitively expensive for an emerging business. When this is the case, a company may be better off leasing the equipment.

If we buy the equipment, we can claim a tax benefit equivalent to the depreciation value of the equipment. On the other hand, if we lease it, are we going to get the tax deduction equivalent to the lease amount we pay? Therefore one has to be very careful about the tax guidelines and the respective lease terms while finalizing the lease. Also remember the lease financing is usually more expensive than bank financing. But it is easier to obtain for small amounts. Also we can easily upgrade the equipment after the end of the lease without worrying about selling the outdated equipment.

How to lease the equipment

Once we decide to lease the equipment we have to search for the best deal. A good deal will make a business success story. On the other hand, an unfavorable deal might prove to be the end of the emerging business. So, it is extremely important to scrutinize the legal fine points when choosing the lease. The leasing company will look for the best deals and will take care of the legal issues related to the deal.

Equipment leasing is an option to look for a company that is diversifying and may not wish to buy the equipment. Or it may be a good choice for a company that is just starting up. Even so, leasing might be more expensive than buying the equipment.

Bulldozer Financing

Ok, you’re ready to go out on your own. You’re tired of working for the man. You have been grading and clearing land for years and know what it takes. You have great contacts that have plenty of work for you but you don’t own your own dozer. And you certainly don’t have $100K or $60K or even $30K to buy something decent that will keep working for you.

So what are your options? Borrow money from a friend? We all wish we had friends with this kind of money ready to hand out. How about a loan from the bank. Well, it might be worth a try. But banks are not usually interested in lending to new businesses and would likely require excellent credit and a huge down payment. Even if you were able to convince them to take a closer look they would probably require a rock solid business plan and financial covenants to oversee your progress.

There is another option. Equipment Leasing. Getting a lease for the bulldozer you need may be easier that you think. If you have decent credit you could be making money with that bulldozer next week.

What is Equipment Leasing?

Equipment leasing is essentially a long-term rental agreement with a buyout clause. The equipment is owned by the leasing company during the lease while the business has possession of and continual use of the equipment. Since the lender owns the equipment, the equipment itself is usually the only collateral. The buyout clause determines the business’s options at the end of the lease. Typically, buyout options are based upon a percentage of the original sale price (e.g. 10% or 20% buyout) or a fair market value (FMV).

Why would you want an equipment lease instead of a loan?

1. Easier to qualify. Banks usually require financial history of at least 2 or 3 years. Some leasing companies will finance equipment for start-ups with a simple credit application.
2. Improve your cash flow. A new or growing business needs to control cash expenditures. Equipment leases rarely require a down payment. -- if anything, only a few payments in advance. Loans require a significant down payment of up to 25% or more.
3. Tax advantages. Leases are frequently 100% tax deductible. If you are shopping the cost of a loan vs a lease, this is a very important factor that can make the lease a significantly better financial solution.
4. More for your money. Since the initial cash outlay is lower you can get more or higher quality equipment.
5. Other advantages. There are some other advantages depending upon specific situations including balance sheet impacts, seasonal payment options, protection from equipment obsolescence, to name a few.

Who provides equipment leases?

Many large institutions and small companies provide leases. Some of these lenders are focused on credit (good or bad), a specific type of equipment (e.g. bulldozer financing or medical equipment), large or small ticket equipment, or leaseback financing.

Many lenders specialize to be more competitive. If they are working with clients who have less than perfect credit they need to effectively manage any defaults. If a typical bank were to give out a loan on a bulldozer and the business defaults, the bank would likely loose a lot of value when trying to sell it. To offset this risk, banks usually require a significant down payment. A specialized leasing company can minimize this default loss and can therefore provide better terms.

How do you find an appropriate lender?

A good small business loan broker will have access to many funding sources and will be best able to find the right lender for a client. These brokers are similar in function to a mortgage broker where they select the lender and process the paperwork to facilitate the entire lending process.

Buying a new car is not a simple task. Before purchasing a new vehicle, you must consider a lot of factors such as cost, insurance, interest on loans, and so on. You must also visit several showrooms in your area and check different websites sites on the Internet. Getting hold of and comparing several price quotations from different sources will definitely help you discover the best deal.

Research on new cars include reading published articles from auto magazines or car websites regarding new car models, features, prices and reviews. You should look for ads in print and online. You should visit several car showrooms and negotiate with different dealers. You may also want to enlist assistance from a car-buying service or broker-buying service to obtain many price quotations. When agreeing on a price, car dealers may be willing to negotiate on their profit margin.

With the technology of the Internet, many of those interested to buy a new car are also researching online. Surfing the Net, you do not have to leave your home or office to swing from different showrooms and deal with very persistent dealers face-to-face. The Internet also offers windows for more information. It posts not just reviews from car experts but from regular car users as well. What’s more, online car sellers sometimes even offer lower prices.

New car quotes can be obtained online following very simply steps. You just visit a site, or better yet, visit several sites, and ask for a quotation on the vehicle you are eyeing. You just have to choose the car type (convertibles, passenger sedans, sports utility vehicles, sports car, luxury cars, compacts, vans minivans, pickup trucks, wagon, etc.), make (Acura, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ford, Honda, Hummer, Hyundai, Isuzu, Jaguar, Jeep, Kia, Land Rover, Lexus, Mazda, Mercedes Benz, Mercury, Mini, Mitsubishi, Nissan, Pontiac, Porsche, Saturn, Scion, Subaru, Suzuki, Toyota, Volkswagen, Volvo, etc.), model and year made. You can also ask for quotations depending on your mode of payment (cash or loan). Some services even compute how much you have to pay monthly depending on how big or small your down payment is. The quotation is then given right then or sent via email in as fast as a few minutes.

Businesses have different needs, and one of the most important is the transportation of raw material to the place of manufacturing and/or the finished goods to the various markets. Various transportation vehicles, sometimes very special ones like vacuum tank trailers, are needed for the transportation of goods. Let us first see the advantages of leasing the vehicles over buying them.

Advantages of leasing transportation equipment

Leasing transportation equipment allows a company to get the new transportation equipment immediately without shelling out all the money at the time of buying the equipment. This way, the company can use these funds for other everyday running expenses. A leasing term corresponding with the manufacturer’s warranty period will make sure that the company does not have to pay for the repair costs of the vehicle.

The cash generated by operations or conventional finance by many transportation companies is not sufficient for buying the new equipment. In this case, such companies can lease this new equipment to expand their business.

In case of a new transport company, it can avail itself of many tailor-made contracts, like transportation equipment for construction. Under this, the company can get all the construction related transportation and other equipment on lease for a special price. It can also get fast financing for leasing.

Transportation equipment that can be leased

All kinds of surface, air and water transportation equipment can be leased. For example, aircraft, railroad cars, and steamships, can be leased. A company can lease from one vehicle up to a fleet of vehicles. Also one can lease used vehicles.

Transportation industries strive to minimize the fixed costs supporting each vehicle. Also the old or obsolete equipment is disposed off regularly, and to balance for that, the transportation firms need to buy new equipment. They have to satisfy these demands using the limited capital. Therefore leasing of transportation equipment is necessary for the growth of the transportation business.

Leasing office space is a chief concern for many businesses. Besides the influence of the cost of office space lease, there are several other vital factors. Some important factors that play a role in office space selection is satisfaction of the employees, output, limitations for growth and, very importantly, the corporate look. To get a fair deal, it is important to have an expert who has knowledge of the current market trend and, of course, the person must have a good understanding of your needs. A veteran tenant representative can successfully get you a very suitable deal.

Tenants do not look for new office space very often but landlords are used to renting out their office spaces repeatedly. Therefore, the tenant has to be really smart and alert and should get a representative exclusively for this purpose. Even if it requires a nominal fee, it will save you from further expenses and keep you from having major complications. In the long run, you will realize that the money spent to hire a tenant representative for dealing with your office space lease issue, is well worth it!

To buy or to lease office space? –This is a question that every business has to consider carefully. The future is absolutely uncertain, especially owing to the ever-changing nature in the rate of the U.S office vacancy and stock markets. So it is essential that the business owner carefully studies the pros and cons of buying or leasing office space.

Now let us see, what are the pros of leasing office space.

First, leasing gives the tenant the option of making a choice of places and the image the area projects. The leasing option is indeed favorable, especially if you are in retail or the restaurant business. The reason is, these businesses depend upon location and image.

One important plus of leasing is that you won’t have to invest a lot of money in office space and therefore you can easily devote that money to running your business,

Also, you don’t have to bear the responsibilities of ownership. An owner of a property has too many responsibilities and carrying them out eats up a lot of time. Thus leasing office space allows you to be focused on your venture and run it smoothly.

Among the cons of the leasing process, the first thing that deserves a mention is the erratic cost factor. With leasing, your rent may increase annually, subjecting you to high costs by the end of your lease. Another downside of leasing is not having any equity. You will be funding someone else’s retirement with your lease payments.

However, office space leasing is a fairly flexible process. The cost of office space depends on the actual footage that is leased. Usually, the tenant has to pay a one-month security deposit in advance for the leased space and for services in a yearly contract. All services are prepaid. The usual price range of leasing single offices, two office suites, three office suites and four office suites are $90-$150, $200-$350, $280-$425, $400-$750 per month, respectively.

There are many important differences to consider when you are deciding whether to get a loan to purchase a car or lease a car from a dealership. Some of the considerations are whether it is business or personal, how many miles you will drive and how long you intend to keep the vehicle.

With a conventional loan the car belongs to the bank that gave you the loan until you have paid off the loan. Then, the car becomes yours. If you are the type that keeps a car forever this is probably for you.

With a lease you are essentially renting the car from the dealership. The lease is like a rental agreement. You make monthly payments to the dealership. But the car does not belong to you. When the lease ends, you have to return the car to the dealership.

Now let's look at some other considerations and comparisons between a lease and a regular loan.

Wear and tear:

No additional costs for wear and tear in your loan agreement. Most leases charge you extra money for any damage they find at the end of the lease that goes beyond "normal wear and tear."

Monthly payments:

Payments are higher with a loan; however, at the end of the loan, you own the car. Payments are lower with a lease. This is because you are not purchasing the car; the dealership still owns it. Once your lease ends, you turn the car back in and the dealership can sell it or lease it to another customer. You may decide to purchase the car at the end of the lease; however, the total cost ends up being more than it would have been if you bought the car instead of leasing it.

Mileage:

No mileage restrictions with a loan. Leases restrict the number of miles you can drive the car each year. If you exceed the mileage allowed, you have to pay the dealer for each mile over the limit, in accordance with your lease. For example, a dealer may charge you 15 cents for every mile that you drive over 24,000 miles in 2 years. If you drive the car an additional 3,000 miles, you would owe the dealer $450 for those miles.

Auto insurance rates:

May cost more during the loan than it will after the loan is paid, because the lender may require more coverage, but usually still less expensive than auto insurance for leased cars.

Usually costs more if you lease a car than it does if you buy. Most car leases require you to carry higher levels of coverage than purchase agreements do. Some insurance carriers may also calculate leasing to be higher risk than purchasing.

These days it seems every where you turn car dealers are trying to sell you on leasing a car instead of buying. While leasing may be good for some, for the majority of people it is not. Here are a few things to watch out for when negotiating a lease, and yes just like a purchase they are negotiable.

When you lease a car you need to pay particular attention to the terminology for what you are responsible for at the end of the lease. Sometimes they charge a vehicle disposition fee which I have seen as high as $500! They may charge you for excessive mileage, excessive wear on tires, etc. Let’s take a closer look at these things.

First off, we have the disposition fee which is the fee charged by the leasing company or bank if you decide to turn the vehicle in instead of buying it at the end of the lease term. The fee is usually described as necessary to cover expenses that the company will incur to sell the vehicle such as getting it ready to sell, auction expenses, and commissions. Be sure that the fee is stated clearly and remember that you can negotiate.

One of the biggies that nails a lot of people who lease is the excess mileage charge. Nearly all leases charge these penalties; as a matter of fact I have never seen one that didn’t. These charges can add up quickly with some companies charging as much as 30 cents per mile for every mile over the mileage allowed in the contract which is typically only 10,000 to 12,000.

I don’t know about you but I drive more than that and so do most people. The average is around 15,000 miles a year. This can be negotiated into the lease so be sure that you get extra miles upfront, it’s a whole lot cheaper that what you will pay on the backend.

Another way that you get stuck is by vague “excess wear and tear” clauses. You need to make sure it is spelled out in the contract what the definition of excessive wear and tear is. If there is no description telling you what the standards are that they go by then it will be up to the leasing company and the person inspecting the car when you turn it in and you will left holding the bag. If you have minor damage you are better off having it repaired yourself than turning it in and letting the lease company handle it. They will always charge more than what you can get it done for.

My suggestion as a former automobile sales manager is that if you are stuck on leasing that you make sure you stay under the mileage allowed, keep maintenance records, repair any damage, and get the vehicle looked over and appraised before turning it end at the end of the lease. If you have all of your records in this way you are far less likely to be hassled.

Warning! …Before Entering Into a Lease Option, You Must Know These 4 Secret Ways That Many Investors Will TRY to Take Advantage of You. Do you realize that the national average for SUCCESSFUL Lease Option Purchases is 15%-22%.

Unfortunately, these numbers are so low because all too often, investors will intentionally stack the odds in their favor.

What if… I could show you how to quadruple your chance of success by revealing a few tricks that investors have been using for years, when they sell a home “lease option” or “rent-to-own”. Here and now, I am going to REVEAL 4 “investor secrets” that investors hope you don’t catch on to, because they are designed protect the investor and make the deal “heavily stacked in his favor”. By discovering these easily noticeable signs, You Will Be Able To…

• find your dream home and dream investor immediately

• never waste your time dealing with an investor trying to take advantage of you

• and always be assured that you have “stacked the odds of success” in your favor.

First of all, if you are looking to buy a home, then congratulations! You really are doing yourself a huge favor by getting into a lease option, and getting out the rent trap that has so many people stuck. But, ONLY IF YOU DO IT RIGHT. Read carefully so that you can stand the highest chance for a successful experience with out getting taken by an investor.

Secret One: LARGE DOWN PAYMENT / NONREFUNDABLE OPTION CONSIDERATION

I am not suggesting that an investor who wants “some” security from his tenant/buyer is out of line. However, be cautious when agreeing to pay these. It seems so natural to feel like you have to pay this, because investors will usually insist on a fairly large down. At least any more than a customary security deposit.

They will justify this need with the excuse that you are a credit risk and therefore they need the security that you are serious.

It seems logical doesn't it? But what they really know is that based on the national averages, they stand a pretty good chance of getting this home back. And when they do,…they hope to have kept your big fat down payment for themselves.

It is a huge safety net they put underneath themselves for the day that you give them the home back. Remember, they know that if you are an average “Joe Buyer”, they stand an 80% chance of getting that home back in the next handful of months.

It is true that if you succeed in purchasing the home, it becomes irrelevant. But remember my point, the investor is already assuming you will fail, and therefore wants to keep your money regardless. Therefore, they want a fairly big one.

Secret Two: RENT CREDITS

This is the greatest brain wash that has ever existed.

WHO DO RENT CREDITS BENEFIT???

Answer – ALWAYS, the investor.

Investors will often lure you into their home by promising rent credits. Or in other words, out of every monthly payment, they agree to take a portion of that payment and give it back to you when you buy the home. For example, if you paid $1200 in rent each month,…the investor might agree to give you back $200 per month. They will often credit it back to you for your future down payment or closing cost.

On the surface that sounds good to you, because you think he is being generous to offer you that big savings.

But here are the facts. Mr. Investor is anticipating that you will be one of the 80% that give them the home back. And if you voluntarily GAVE HIM $200 MORE than you should have – Guess who just got richer at your expense. (4 out of 5 times)

Again, you might argue that if you succeed it is irrelevant, and that you were glad to have had the little nest egg saved up or credited back. But like I said before, I will reiterate that the investor is fully expecting the law of averages. He completely anticipates that you will not actually buy his home. Therefore he keeps the $1000 he normally would want, and also the $200 per month that you gave him over and above so that he could do this rent credit thingy.

My advise is this… negotiate to pay him $1000 (which is going to be his net anyway when you succeed), and then SAVE your own $200 in your own banking account and keep it out of Mr. Investors hands altogether.

Same net result to you… Much more security!

Secret Three: SHORT TIME FRAMES & TERMS

When an investor only offers 6 or 12 month terms, they are setting the stage for you to fail. 9 times out of 10 you will need 12-18 months to have your credit ready for a home loan. Rare is the exception to this rule DESPITE how many promises lenders have made to you about how close you are to getting your own loan.

BE REALISTIC and don’t let an investor fool you into taking anything less than a 24 month lease option term. If an investor has your best interest at heart they are going to give you plenty of time to clear up your issues and help you succeed. But unfortunately many investors don’t. THIS IS CRITICAL! You Must have a length of term that is long and realistic. Anything less is suicide.

Secret Four: LACK OF CREDIT REPAIR

The average investor will not offer to help you build your credit up while you are in the home. This is a certain sign that your investor clearly wants you to turn the home back to him in the future. Be careful to stay away from investors who assure you that “you can handle that part of it on your own”.

This is one area that 9 out of 10 buyers NEED credible help to overcome their challenges. If an investor offers you credit help, then that is a good sign that they want you to succeed. But if they don’t…this is their way of hedging the odds in their favor, that they can take the home back in the future, because you will fail.

CONCLUSION:

A Lease Option is a VERY POWERFUL way to take control of your future. If you can’t otherwise get a home loan I highly recommend it over a standard rental home or an apartment. Just make sure you do it right. Watch out for these tale-tale signs of a predator investor. There are companies and private investors out there who offer legitimately great deals to tenant/buyers who need a fair and honest opportunity. Some with success rates as high as 90% of the time. (Verses the national average 15%)

Search them out and compare some of their offers to each other. Never settle for a home where the investor is “stacking” the odds in his favor by using any of these above listed tactics. Now that you know these 4 simple secrets…

When it comes to leasing equipment, understanding what it can do for your business is only part of the equation. Understanding and choosing the best lease for your business is another matter altogether. The market is primed for the use of equipment leasing to expand, grow and hone a businesses assets, but at the same time there is little material out there to help a business judge what’s a good lease and what isn’t.

What You See Is What You Get

There is an old truism that says you get what you pay for. When it comes to equipment leasing, you want a lease that clearly defines your responsibilities versus the lessor’s responsibilities. You really want it to be what you see is what you get. So how do you go about choosing the best type of lease for your business?

Shop the options is the best way to get started. If you know what type of equipment you need, then comparison-shop the options with different companies. Some key figures to make sure are included in any lease option are:

• Cost Per Month
• Maintenance Contract
• Cost of Maintenance Contract
• Training Available
• Customer Service
• Availability for Software and Hardware Support
• Obsolescence Upgrades
• Term of Contract
• Renewal Terms

When it comes to long-term leases, it’s better to set the terms from the outset to deliver the best possible results to the company overhead. When it comes to maintenance, many leasing companies package that as a separate component. If a piece of equipment fails altogether, it’s likely the leasing company will replace it. But what if the piece of equipment goes down? Will there be a 2-hour, 4-hour or 24-hour response time to getting a service technician on-site and the equipment back into operation?

This information is critical because when a piece of equipment is operable, it’s just a piece of junk taking up room and preventing the business from operating normally. Upgraded maintenance contracts will have to be negotiated. But there’s also the concern about what happens when a newer, better model of equipment becomes available? Does the lease terms support an upgrade to this model of equipment or will it require waiting until the contract is up for renewal?

Beware Hidden Costs

By getting the information up front, a business can avoid hidden expenses. They can plan budgetary requirements and potentially for long-term leases, bring up training requirements for their staff. This is another concern that some companies don’t consider when negotiating a lease. Will the operator of the equipment receive training from the leasing corporation? Do they have representatives that understand the operation of the equipment and provide certified instruction? If not, how is that handled?

While this will not be a concern for every piece of equipment leased, for those businesses that require certified training it’s good to know if it will be available. Also in the case of leasing computer equipment, how is software licensing handled? Is packaged into the hardware lease or do those licenses need to be obtained separately?

Finally, understanding the renewal terms can help circumvent a rise in cost for renewing an equipment lease. Some contracts will allow locking a price for a period of five years. The lease may only last two years, but at the renewal point the cost is locked in for that particular piece of equipment. When it comes to a long-term budgetary forecast, every piece of information can help.

Clearly defining what an individual contract delivers from a leasing company can provide a business with the opportunity to comparison shop. By comparing the different options, price levels and services from one leasing company to the next, a business will be choosing the best equipment lease for their business.

Advancing technology is bringing with it new medical innovations. We are certainly benefiting from these innovations, as in the case of new scanning equipment. This equipment is at the forefront of research and is very costly. To keep up with the technology, hospitals have to update their expensive equipments regularly; otherwise, they cannot offer the best health care to their patients. Every time a medical establishment upgrades the equipment, it has to sell off the old equipment.

Advantages of leasing medical equipment

Doctors starting a new practice might have modest capital and therefore not be able to afford to buy the best, new equipment. This will certainly hamper their business prospectus. Who will go to a new doctor with obsolete equipment? By leasing, the doctors can get the latest equipment and can use their cash to run the practice efficiently.

Large hospitals might have the capital required to buy the latest equipment, but they are in danger of getting burdened by the obsolete, costly equipment in near future. By leasing, the risk of ending up with an obsolete machine is minimized, as you can build, upgrade, or add-on to the lease. In the process, hospitals also save lot of cash, as there is hardly any upfront amount required for leasing the medical equipment. As a result, the hospitals can expand their business with the saved money.

Medical equipments available on lease

According to a study, the medical industry in the United States leased approximately $ 3 billion worth of equipment in the last year. Examples of the equipment that can be leased are blood analyzers, CT scanners, heart monitors, and X-ray machines.

In the medical industry, businesses need to stay equipped with the latest machines. Therefore, in such a technologically driven business, leasing medical equipment is a more profitable choice than purchasing it.