At the end of your equipment lease you can return the equipment. If you use a bank loan or purchase equipment with cash you are burdened with selling the used equipment yourself if you no longer need it or if it is out-of-date.
To meet your company’s financing and leasing needs, The Moneyman will work with you to create a payment plan that best fits your operational requirements. Working through the term and payment options will help create the best equipment lease for your company.
Leasing and financing offer less red tape than with bank financing. You can also complete the process quicker which is important if you need your equipment by a specific date. Moneyman offers, free of charge, a lease manager who will coordinate the details with your equipment vendor to make sure your lease is completed in the timeframe needed.
In most cases, the full amount of each lease payment is deductible for tax purposes. (Consult your tax advisor to make sure the type of equipment lease you are entering into allows for a tax benefit) In some cases, this deduction from an equipment lease is higher and may have more advantages than the depreciation benefits of ownership.
If you choose a residual-based or fair-market value lease, lease financing transfers some of the risk of obsolescence to the leasing company.
This happens in two ways.
First, you pick a term duration that offers you comfort. If you think the equipment will be obsolete in two years you pick a 24 month term lease.
Second, at the end of an equipment lease you are able to choose to:
1) return the equipment
2) renew the lease, or
3) purchase the equipment.
With commercial equipment leasing and financing you have the flexibility to make your choice at the end of the lease term. When you purchase equipment via a bank loan or cash, you own the equipment at the end of the term. This gives you no flexibility. If you choose to return the equipment, the leasing company then assumes the ownership, leaving you free to obtain up-to-date equipment.
The term and payment of the equipment lease are fixed once the lease is done. You know exactly what your payment will be every month and can better forecast your cash flow.
When acquiring equipment other incidental costs such as sales tax and installation charges can be put into the lease financing. If the equipment is purchased with cash these costs need to be paid up front and can be significant.
Equipment leasing, in most instances, provides lower payments than with a bank loan. Five Point Capital tailors your payments to your leasing and financing needs and can be adjusted by lengthening or shortening the term of the lease.
If a small company wants to borrow money from a bank, a down payment is required and can range from 10 to 20%. With and equipment lease, there is no down payment and typically one or two payments are collected up front. This ranges from 2-6% of the equipment cost
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