Hi,
Equipment leases are available in a multitude of places ranging from commercial leasing companies, private leasing companies and many equipment manufacturers. The cost of leases varies considerably from one place to the next. In determining the lease best suited for your business consider the following:
1) Determine the term of the lease before calling leasing companies.
2) Have a general idea of the amount of monthly payments the business can afford before calling leasing companies.
3) Ask if first, last and security payments are required with lease inquired about.
4) If the equipment being leased depreciates very quickly, and has a high residual value at the end of the lease, do not use it as a factor to determine whether or not that particular lease is suited for the business needs.
5) Ambitious lease salespeople often have very creative payment streams on leases to entice prospective customers to sign the lease. It is important to get full disclosure on any lease to make sure there are no hidden surprises down the road.
6) If the equipment being leased is for a highly speculative business such as a restaurant, inquiring about whether or not the lease is assumable is not a bad idea.
7) The cost of insurance is a consideration when determining the cost of leasing and needs to be factored into the decision.
8) Before signing the lease, determine who is responsible for servicing equipment.
Leasing is ideal for businesses that have to worry about cash flow. Lease rates are generally figured at a cost per thousand dollars rather than a specific interest rate.
Tomorrow I'm going to write about shopping for loans to purchase equipment.
Until then,
Alan
Showing posts with label leasing companies. Show all posts
Showing posts with label leasing companies. Show all posts
Thursday, May 3, 2007
Thursday, March 1, 2007
Commercial Leases
Hi,
In today's business world, commercial leases are used for everything from the salt and pepper shakers at the restaurant down the street to the irrigation systems in rural farming areas. Leasing enables business owners to get the equipment they need while conserving their cash flow. In many cases, business owners would not be able to afford some of the equipment they are able to acquire through a lease. A good example of this is when farmers lease $750,000.- $1,000,000. worth of irrigation equipment: equipment they would not be able to afford even with a conventional loan.
By taking advantage of the irrigation lease, the farmer might increase the yields on his crops three to four times over, while increasing the value of his or her farm 200%-300%. Another good use of commercial leases is for restaurants. When opening a new restaurant for the first time, most people need to conserve their cash flow and can ill afford to buy $250,000.-$500,000. worth of equipment and furnishings. Leasing is a perfect option for them. Another area in which commercial leases are a suitable option is the construction business. Due to the exorbitant cost of equipment, many small to mid-size construction companies could not be in business if they had to purchase their equipment. Commercial leasing is also a perfect fit for people starting out in the medical field. Two drawbacks of commercial leases are:
1) In most cases, personal guarantees are required by the leasing company.
2) In the event of business failure, it is often difficult to find someone acceptable to the leasing company to assume the lease.
Leasing companies are similar to mortgage companies in that there are primary leasing companies and secondary leasing companies. Leasing rates vary drastically between the two markets. It is imperative for people exploring the option of commercial leases to check with different leasing companies to find the best deal available to them.
Tomorrow I'm going to talk about conditional sales contracts.
Until then,
Alan
In today's business world, commercial leases are used for everything from the salt and pepper shakers at the restaurant down the street to the irrigation systems in rural farming areas. Leasing enables business owners to get the equipment they need while conserving their cash flow. In many cases, business owners would not be able to afford some of the equipment they are able to acquire through a lease. A good example of this is when farmers lease $750,000.- $1,000,000. worth of irrigation equipment: equipment they would not be able to afford even with a conventional loan.
By taking advantage of the irrigation lease, the farmer might increase the yields on his crops three to four times over, while increasing the value of his or her farm 200%-300%. Another good use of commercial leases is for restaurants. When opening a new restaurant for the first time, most people need to conserve their cash flow and can ill afford to buy $250,000.-$500,000. worth of equipment and furnishings. Leasing is a perfect option for them. Another area in which commercial leases are a suitable option is the construction business. Due to the exorbitant cost of equipment, many small to mid-size construction companies could not be in business if they had to purchase their equipment. Commercial leasing is also a perfect fit for people starting out in the medical field. Two drawbacks of commercial leases are:
1) In most cases, personal guarantees are required by the leasing company.
2) In the event of business failure, it is often difficult to find someone acceptable to the leasing company to assume the lease.
Leasing companies are similar to mortgage companies in that there are primary leasing companies and secondary leasing companies. Leasing rates vary drastically between the two markets. It is imperative for people exploring the option of commercial leases to check with different leasing companies to find the best deal available to them.
Tomorrow I'm going to talk about conditional sales contracts.
Until then,
Alan
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