FAQ - Leasing 101
What is a lease?
It is an agreement to pay for the use of equipment for a specified amount, over a set period of time. Leasing is an attractive option for many businesses due to the advantages leasing offers.
Are there different types of leases?
Yes. There are two fundamental types of leases. A true or operating lease and a finance or capital lease.
True or operating leases are usage agreements and typically fall under a Fair Market Value (FMV) or 10% Purchase Option lease.
10% Purchase Option Lease
This type of lease allows you to use the equipment you need now and own it later, if you want!
- Lower monthly payments
- Typically 100% tax deductible; just like office rent or utilities*
- Several end of lease options: Buy It for 10% of the original equipment cost, continue to rent it, return it or trade it up
Fair Market Value (FMV)
This option, also known as a true or operating lease, also provides flexibility at the end of the lease. You can decide to own the equipment, extend the lease, or upgrade based on business need. This option does not have a fixed purchase amount.
- Lower monthly payments
- End of lease options, however does not offer a fixed end of lease purchase amount
- Several end of lease options: Buy It for the current Fair Market Value, continue to rent it, return it, or trade it up
Finance or Capital leases are also considered conditional sale contracts. The lessee owns the equipment, but lessor retains a security interest until the obligation is paid in full.
$1.00 Buyout Option
This type of program, also known as a Financing or Capital Lease is perfect if you want to own the equipment now but pay as you go. You can account for the lease as a purchase and depreciate the asset on your balance sheet, all without committing a large amount of capital.
- Your payments buy the equipment
- Take advantage of IRS Section 179 or just depreciate it*
Advantages of Leasing
Staying on top and responding to your ever changing business needs is critical.
- Leasing allows you to get the right equipment your business needs and quickly.
- Leasing provides flexible options and may allow you to incorporate add-ons and upgrades as they become available.
- At the end of the lease term, depending on the type of lease you choose, you may buy the equipment, trade it up for the latest technology, simply return it or if you are unsure, you can continue to rent it for as long as you need. Ultimately, leasing provides you protection against obsolescence.
There are several ways leasing provides financial benefits.
- Leasing pays for itself. It puts profit making equipment in your hands quickly. Use of the equipment adds value immediately to your company and ultimately your bottom line.
- Leasing also assists with budgeting. It allows you to allocate your funds over time, with fixed monthly payments and a fixed rate, for the length of the lease term. Lease terms can be very flexible to match your cash flow.
- Conserve your working capital by using your cash to invest in your business. You can achieve this by leasing your equipment rather than using your cash to make purchases outright. This can help you generate even more profits.
- Preserve your existing lines of credit for other operational needs. Tax benefits can reduce the cost to obtain equipment.
- Depending on the lease type, lease payments may be considered an operating expense and be fully tax deductable.
- Another tax advantage is Section 179*. Businesses that spend less than $800,000 a year on qualified equipment can write off up to $250,000 on purchases in 2010!
*It is recommended to consult your tax advisor regarding your specific tax situation and to obtain the most current up-to-date details.
Deciding to lease with Bankers Leasing will create an additional credit source for your business needs today and tomorrow.
What do you lease?
We provide leasing for a variety of business equipment. We specialize in the following areas:
Chiropractic, Physical Therapy, General Medical, Pharmacy, Office Equipment, Computer hardware/software, Business Phone Systems, and more.
Do you lease used equipment?
Yes, depending on the type of equipment, we provide leasing for used or refurbished equipment sold from an authorized dealer.
Maintenance and warranty
As the lessee you are responsible to maintain the equipment in good working order. Bankers Leasing Company does not make any warranties nor provide any maintenance. Any licensing and warranties offered by the suppliers or manufacturers are passed directly to you.
Who can lease?
Any business, organization, association, or government entity upon credit approval may lease equipment for business purposes.
Who selects the equipment?
You do! You are able to choose the equipment and the supplier. You can obtain and lease equipment from more than one supplier.
Does it cost more to lease?
Leasing is a practical way to use new equipment and compares favorably with other forms of financing, costing you about the same. Businesses choose to lease for cash flow purposes along with the other advantages listed under the Advantages of Leasing.
Is leasing complicated?
Not at all, is it quite simple, especially with Bankers Leasing Company. Banks and conventional lenders typically require mounds of paperwork and take more time for decisions, possibly days or weeks. Bankers Leasing however, has a simple application process and we guarantee a response in only 2 business hours or less! We work directly with the supplier to make the transaction simple for you to obtain the equipment you need quickly!
Can I cancel my lease?
It is a non-cancelable agreement. You may however payoff the lease at anytime during your lease term.
Can I return my equipment and stop making payments?
The lease is non-cancelable. Depending on the type of lease, you may return your equipment after all the lease payments have been satisfied or the lease is paid off early.
Can my lease be paid off early?
Yes. You may request a payoff at anytime by phone toll free at 800-247-8136, email at welcometoblc@banleaco.com or fax a request to 800-342-6855.
Are there any penalties if I pay off early?
You will never owe more than your original obligation.
Is my lease transferable?
Yes, we call this a lease assumption. The new lessee must complete an application and receive credit approval for the assumption to occur. Certain restrictions may apply.
Can I move my equipment?
Yes, upon our authorization. We ask that you contact us prior to moving the equipment for approval and furnish us with the new physical location and additional contact information.
What happens at the end of my lease?
If it is an operating lease you can choose to:
- Return the equipment at your expense
- Purchase the equipment
- Establish a new lease to upgrade your equipment
- Continue to rent until you decide which choice is best for your business
If it is a capital lease, once all lease obligations have been satisfied you may:
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