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Frequently Asked Questions
Who can lease?
Any company, organization or association. At present we do not lease equipment to an individual for personal use.
How is the monthly payment calculated?
Monthly payment is determined by a Lease Rate Factor: A periodic rental payment to a lessor for the use of assets. Lease rate factor X equipment cost = your monthly payment.
How do I qualify for a lease ?
In most cases, we only require the following information to process our lease application: - Legal Company Name
- Address
- Phone Number and Fax Number
- Number of Years in business
Should your company meet our credit standards, we can proceed with your lease. In some cases, this preliminary application will not provide us with sufficient information to make a credit decision. In those cases, the following information is required: - Name of Owner
- Principal and/or Primary Shareholder of the company
- Social Security Number of the above person
- Home address and phone number of the above person
When do I have to provide Financial Statements?
Financial Statements are only required in a few circumstances. When the amount that you are leasng is over $75K. When there is insufficient information about your financial strength on a credit report.
What are my options at end of lease?
You own the software at the end of the lease once you pay the final buyout invoice, typically 10% of the purchase price or $1.
Who owns leased software?
The Leasing Company, as lessor, is the owner of leased equipment until you choose to purchase the equipment at the end of the lease.
If my company is new, can I still lease?
Yes, pending credit approval. A security deposit may be required.
What factors are used to determine credit worthiness? The length of time in business, references from bank and trades, and D&B and credit bureau ratings.
What about sales/use tax?
Your company is responsible for any and all sales/use taxes.
What effect does leasing have on Lessee's bank line of credit?
With a lease no money is borrowed. Your bank line is unaffected.
Can I terminate my lease early?
A lease is a non-cancelable contract. If you choose to terminate the contract early, you are responsible for the remaining stream of payments on your contract. Thus, there are no economical advantages to this course of action. If you think that you may want to terminate your contract early, you would be wise to choose the shortest lease term possible, or purchase your system outright today.
What Types of Companies Lease?
Lessees vary widely from small, one-person operations to Fortune 100 corporations, and the kinds of equipment being leased are just as diverse. Transactions range from a few thousand dollars worth of equipment (such as fax machines) to multi-million dollar cogeneration facilities, telecommunications systems, medical equipment (including CAT scanners and MRI imaging), office systems, computers, commercial airliners, and transportation fleets. In 2002, $244 billion worth of equipment will be leased.
What are the Benefits of Leasing?
Leasing offers numerous advantages over other financing methods: - Tax treatment. The IRS does not consider an operating lease to be a purchase, but rather a tax-deductible overhead expense. Therefore, you can deduct the lease payments from your corporate income.
- Balance sheet management. Because an operating lease is not considered a long-term debt or liability, it does not appear as debt on your financial statement, thus making you more attractive to traditional lenders when you need them.
- 100 percent financing. With leasing, there is very little money down - perhaps only the first and last month's payment are due at the time of the lease. Since a lease does not require a down payment, it is equivalent to 100 percent financing. That means that you will have more money to invest in revenue-generating activities.
- Immediate write-off of the dollars spent. Leasing payments are treated as expenses on a company's balance sheet, therefore, equipment does not have to be depreciated over five to seven years.
- Flexibility. As your business grows and your needs change, you can add or upgrade at any point during the lease term through add-on or master leases. If you anticipate growth, be sure to negotiate that option when you structure your lease program. You also have the option to include installation, maintenance and other services, if needed.
- Customized solutions. A variety of leasing products is available, allowing you to tailor a program to fit your month-to-month or year-to-year cash flow needs. You are able to customize a program to address your needs and requirements - cash flow, budget, transaction structure, cyclical fluctuations, etc. Some leases allow you, for example, to miss one or more payment without a penalty, an important feature for seasonal businesses.
- Speed. Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Many leasing companies can approve your application within one or two days and you can have your equipment very quickly.
- Improved cash forecasting. By leasing equipment you know the amount and number of lease payments over the life of the leasing period, so you can accurately forecast cash requirements for your equipment.
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