Equipment Financing FAQ

Q: What is the difference between equipment financing and leasing.
A: Equipment financing is a broader term that covers both.

Leasing is for a specific number of months. At the end of the lease, the lessee may acquire possession of the equipment or return it and begin leasing newer equipment.

Equipment financing is an actual loan and the borrower takes possession of the equipment at the end of the term.

Leasing and an equipment loan are handled differently on your balance sheet.

After review of your specific requirements, we can determine whether a loan or lease is more efficient.


Q: How much does it cost to lease?
A: Lease rates are determined by the type of equipment and your company’s credit rating.

Don’t look at a lease payment and think “I can save money if I get a loan”. If you get an equipment loan, it may require a down payment on the equipment, plus it is considered an accounting liability.

You should look at leasing as though you are “renting” the equipment, but at a better rate than what a rental shop would charge, plus it is in better condition.

Do you think credit card rates are high? Depending on the equipment and lease term, lease payments would be comparable to moderate credit card rates.


Q: Are there any costs to leasing?
A: To start a typical lease, you would expect to pay:
* Due diligence and loan processing fee
* First and last month’s rent


Q: If I want to pay off the lease early, is there a prepayment penalty?
A: Most lessors allow you to completely pay off a lease without penalty. If you want to do so, you would contact the lessor and ask for a current rate (which should be cheaper that going the entire term). NOTE: Some lessors require that a minimum number of lease payments be made before they will allow an early prepayment.


Q: Can any type of equipment be leased?
A: There are some restrictions. If you have any concerns, we suggest you contact us directly to discuss your situation.


Q: Is leasing only for equipment or will you consider other things?
A: Leasing is not limited to equipment. We suggest you contact us directly to discuss your situation and see if there are other options.


Q: Can you do start-up companies? Or companies with low credit ratings?
A: Some start-ups and low credit ratings can be done. Final approval depends upon your industry and cost of equipment. Personal guarantees or additional collateral may be required.


Q: Can you lease internationally.
A: Yes, depending upon the equipment, country and transaction amount.


Q: My international customer asked if we could sell equipment on better terms. Can leasing work for him?
A: We suggest you contact us directly to discuss the situation and see if there are other options.


Q: Do you work with vendors?
A: Yes. We can tailor a lease package to fit your customers and provide quick approvals.


Q: Can I lease used equipment?
A: Yes, depending upon the type of equipment.


Q: I just purchased the equipment two months ago. Can I still do a lease?
A: A sale-leaseback can be done on equipment you currently own. Please contact us directly to discuss the situation .


Q: At the end of the lease, do I keep the equipment?
A: Depending upon your lease agreement, you may have these options at end of lease:
$1 buyout: Purchase equipment for $1.
XX% Residual value: Purchase equipment for XX% of original cost.
Fair Market Value: Purchase equipment for current FMV.

Or just elect to move on to a new lease and newer equipment.

Each of these options differ in the monthly rental payments. A lower monthly payment may have a higher residual amount.


Q: How long is an average lease term?
A: Lease terms typically range from 12 months to 60 months. The term is determined by the size of monthly payment you want to make and the total cost of equipment. Some equipment may warrant a term in excess of 60 months.

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