Equipment lease financing tips for the buyers:

While most equipment leasing firms advertise about several different forms of the equipment leases, but essentially there are just two basic types and the rest are modifications of these two basic types. Lets take a look at these two basic equipment lease types:

1. Financed lease: this lease financing solution for equipment is the one that carries the maximum advantages for your business, as the business can later on purchase the equipment for a very nominal price. Ideally, the businesses should plan on using this type of equipment leasing for those equipments, which it wishes to take over once the agreement ends. The payment term is calculated taking into consideration the equipments expected useful life.

2. True lease: this type of equipment leasing does not consider the expected useful life of equipment. At the end of the agreement the business has an option of either purchasing the equipment at the fair market value or it can simply walk away. The payments to be made for the lease term are usually lower when compared with the payments of a financed lease because the leasing firm preserves the right to sell off the equipment at the end of the agreement. The added advantage of this lease type is that the business gets to write off the payments in the way it desires to.

Payment options:

There is a variety of payment plans from which the business can choose according to its financial situation. A seasonal business which experiences variable revenue flow can decide in favor of a skip lease option which allows it to skip out on the payments for the months in which the revenue is low, without any penalty charges being imposed on it by the equipment leasing firm.

If a business is in the setup phase, where it does not have good amount of funds available and still needs the equipment urgently, a payment plan which starts off with low payments can be very useful. The payments will gradually increase over time, but this will create no problem because by then the equipment would have started generating revenue for the business.

We have just enlisted these two equipment leasing payment plans to give you an idea that how you can use different payment plans to manage within your current funds. However we will come back to the main objective of this article which is to help you out in the purchase of equipment leasing for your business. For better understanding we have divided the remaining information into two segments, the first one dealing with the choice of the right equipment financing firm and the second one dealing with the application procedure for lease financing.

Making a choice about the equipment financing company:

Essentially, the business should begin with research and evaluation of the probable sources which are in the field of providing equipment financing solutions. It is important to look for an equipment financing firm which can operate like a business partner. The leasing firm should be attentive to your requirements and specifications, and be willing to provide answers to all your questions that you may have at the beginning. Every business faces good times and rough times, and the equipment lease financing firm that you choose should have the right attitude and should cooperate with you during all times. There are some leasing firms which will either take back the equipment or increase the charges when they see that the business is going through a bad phase, it is best to avoid such firms.

An equipment leasing firm that has a long and sufficient amount experience in this field will be able to provide you with better services and solutions. Also you could look forward to getting lease financing for your equipments from firms which cater to specific industries only. These specializing leasing firms are better equipped to take care of your equipment leasing requirements and they provide you not just a good deal but also better services throughout. The best place to research for such equipment leasing firms are the specific industry associations and industry trade journals.

Before you finalize, take the extra effort of making a reference check with some of its existing customers. All the good equipment leasing firms will show no hesitation in handing over to you the contact information of some of its clients. Try to get contact information of businesses which are similar to your business in terms of the size and industry.

Here are some points that you must inquire about when making a reference check:

1. How fairly has the business been treated by the financing company

2. Was the leasing firm able to provide the right leasing solution

3. How cooperative was the leasing firm during the application process

4. In case the business had any problems in making payments for the equipment lease, what measures were taken by the financing company

5. Are these businesses keen to continue working with the same equipment leasing firm in the future

The responses that you received during the reference check can be analyzed in the light of the terms and conditions which have been offered by the lease financing firm for your specific business. Consult at least four to five different financing firms and carry out detailed evaluation for each of these firms. To collect information for the purpose of comparison, be specific in giving out the same requirement details to all these firms such as:

•The equipment cost.

• The proposed term of lease.

•Whether you plan to purchase the equipment at the expiring of the term or not.

Comparison should be made only for the similar equipment lease programs. You can get quotes from the lease financing firms either in person or online, while these quotes are reasonably accurate, they still can be a slight different from the exact payments. The actual payments could also get affected by your credit situation.

The application procedure:

Ideally, the best time to fill up your application is only when youre completely sure about both the equipment lease type and the equipment lease financing firm. The applications go through the same procedure as any other credit application, such as examination of the credit report and the financial accounts of the business.

In comparison to traditional loans, you will find the procedure to getting an equipment lease somewhat tougher, because most of the financing firms avoid applications from less experienced businesses. These firms are also particular about the credit scores of the business. Usually they would look for a business which has a minimum of two years of experience.

As a normal practice, the equipment lease financing firms intimate the business about their acceptance or rejection of the application within two to three days from the date of application.

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