How to Pick an Equipment Leasing Company
Equipment leasing is a great way to get new technology without making a large down payment and tying up a lot of your company’s working capital. Choosing the right equipment finance provider can be difficult if you do not know what to ask. First, you should know the three different types of equipment financers. A broker acts as an intermediary, working with multiple financing agencies to negotiate the best deal. A leasing company is generally the leasing arm of a manufacturer. The third is an independent lessor, who is generally a third-party lease provider and may specialize in the re-marketing of equipment.
When you are choosing a lessor, you want to spend some time checking them out, just as they will look at your company. Look at the experience the company has in your industry. Can they provide references? You should also take time to look up their business information, like payment history or credit history, a financial statement and any public filings. You also want to look for pending litigation. Then, ask these questions:
• How much money is required up front? Many leases cover 100 percent of the dues for an equipment purchase, but some may require a down payment. Make sure you can cover the fees, if necessary.
• Will your company get to take advantage of the tax incentive or will the lessor claim the depreciation?
• What is the structure of the lease? Are the terms flexible? Many times, your business can defer a payment to give yourself an extra buffer before the first payment is due.
Don’t be afraid to ask questions and get more information. If the application requires mountains of paperwork or the payment system needs a lot of documentation, you may want to look for another equipment leasing company that won’t tie up your time and money with a lot of bureaucracy. Leasing should be easier than getting a loan.