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2016-12-08

 

The fundamental attractiveness of leasing lies in simplicity- Lessor purchases an asset and provides the Lessee the use of the asset in exchange for funding it, until finally such time as the asset has been paid off. This is done as the basis for lease or rental repayments. Here, instead of making a principle and interest payment, you create a lease payment.

 

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Understand the Concept of Equipment Leasing Financing
2010-11-23

 

The concept of equipment leasing financing is just like advancing a loan, except here the object will be some sort of equipment which the lender owns and leases to a borrower for a stipulated amount of time. At the end of the said period, the business has the option to buy the equipment leased for the prevailing market price, or extend the lease agreement or return it to the lender.

Computers, machinery and other expensive infrastructure required for the functioning of a business can be acquired via a rental agreement which constitutes the leasing. Thus the borrower gets to use the items on lease without the responsibility of ownership. This is by far a better option than investing large amounts in machinery, so that funds can be diverted to more demanding areas like marketing and operations.

Companies specializing in equipment lease are not bound by strict regulations like banks so they are in a position to advance leases at competitive rates. There are no complicated procedures to be complied with in getting an equipment lease. Online applications are processed much faster.

A major advantage with equipment leasing is that you can upgrade equipment from time to time provided of course; such a clause is included in the agreement. So there is no need to stick with outdated machinery. Equipment leasing also involves financing of soft costs like installation and training costs.

The business is not liable to pay taxes on these leased items up front, so again a large amount of funds remain free which can again be absorbed into the business. Make sure all the clauses of the agreement are clear, for e.g. in case you intend to pay off the lease early, find out whether there are any prepayments for early payoff.

You can try equipment leasing financing when you are short on funds and would like to invest more on heavy equipments.

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