Leasing Options - Invest in your productivity
Whether it’s an unexpected surge in demand that outpaces your current production capacity, new competitive pressures, or even sudden breakdowns or damages to your current equipment, there are a number of leasing options to put your business back on track.
Equipment Lease Options
Equipment leasing is the primary form of business financing available to owners and operators. In order to provide enough industry-wide financing for the large volume of trucks and trailers on the road today, certain types of leasing are available to choose from.
These leases share the advantage of fixed monthly payments, but with the guaranteed option to purchase the equipment for a nominal price at the conclusion of the lease. With this type of lease, there is no uncertainty about the value of the equipment at the conclusion of the lease as the buyout terms are generally a part of the initial agreement.
Sale/Leaseback financing is a unique and effective method for generating capital for your business needs. You use your equipment to get the capital. There are many potential benefits for your business if you choose this option. With a Sale/Leaseback, you can continue to use your equipment, so productivity never slows down, and your revenue should remain constant. The extra capital you get can be applied to expanding your business and increasing revenue as it can be used for any purpose.
True Lease/Operating Lease
Also called Fair Market Value Lease
The most notable feature of this type of lease is that its structure does not contemplate a full payout of the cost of the equipment as is the case in a “Finance” type lease.
A significant benefit is that the monthly payments are also less than on a finance type lease (above) or even a bank loan. Typically the lessee either returns the equipment at the conclusion of the lease or may be granted the opportunity to purchase the equipment from the Lessor for “the fair market value.” The choice of operating versus capital lease depends largely on the operator’s equipment replacement strategy and view towards long-term equipment repair and maintenance.
A stretch lease offers the lowest monthly payments and tax benefits available, and is probably for you if you want to take advantage of lower payments and may want a purchase option in the middle of the lease term. Stretch Leases offer the lessee an option, at the end of the primary lease term, to either extend the term of purchase of the asset. Should the lessee choose to extend the term, no later purchase option will be available, as the present value of the extended lease payments is usually equal in value to the option price.
Line of Credit Lease
The line of credit-lease allows your business to combine all of its equipment needs under a single, pre-approved lease line of credit. Whether you need $20,000 or $500,000, it all depends on how much your business qualifies for. A pre-determined rate will be quoted based on the total value of the Lease Line of Credit.
For owner-operators, equipment leasing is much easier to come by if the applicant owns their own home and has reasonably good credit. This will also result in lower leasing rates and more repayment options.
6665 Tomken Road #202,
Mississauga, ON L5T 2C5,
647 227 3385
Trucking & Transportation