Tweet

Not Getting The Best Canadian Equipment Lease Interest Rates in Commercial Leasing?

Guest post by: Stan Prokop

Article Overview: Information on equipment lease rates in the Canadian market place . How lease interest rate and structure plays a key role in commercial leasing in Canada .

Not Getting The Best Canadian Equipment Lease Interest Rates in Commercial Leasing?

Looking for the best deal in town on Equipment lease rates in commercial leasing asset acquisition ? Our clients ' interest 'in getting those best rates is always somewhat amusing to us. Why? Simply because the ability to understand how lease pricing is derived is not always clear to Canadian business owners and financial managers.

Lets examine some of the key factors that drive your final pricing and how you can have a very direct effect on the assets you finance and the price you pay - as always it seems to always come down to that ' monthly payment ' - so lets demystify that process .

First of all many business owners never take the time to look at their alternatives when it comes to equipment leasing of their fixed assets. Two key issues come into play here, one is simply they type of lease they enter into (there are two types - do you know which is which) and the second is understanding what the 5 (yes five!) components are of a very simple lease calculation.

Back to point # 1: When you are making that lease versus buy decision make sure you evaluate your alternatives. The key alternative to lease finance is one in which you might consider a bank term loan, or alternatively purchasing the asset out of your operating cash flow based on existing credit lines that are in place. But quite frankly the reason you are reading this in the first place is that you have already decided that commercial equipment lease financing is in fact the best method of asset acquisition - at this point you just want a good deal . So we're assuming you have done your lease vs. buy analysis and are focused on our core subject today - a great lease rate and structure!

Getting back to those 5 key elements in lease financing pricing - what are they? They are simply as follows - the term of your lease, the interest rate being charged by the lessor, the value of your transaction, the future value of the lease, ( i.e. what happens at the last payment ) and out of that falls nicely # 5 - your monthly payment .

Many business owners, and are we say, financial managers don't use a financial calculator. If you have access to that type of calculator you can simply input either your data, or assumptions on any of those 4 critical data points and out will pop the last piece of data that completes the commercial leasing pricing and structure.

Quick example - lets say you are leasing an asset for $100,000 - you want a 5 year lease, you think your lease interest rate should be about 8%, and you want to own the equipment at the end of the lease. Congratulations, you have just quantified 4 out of the 5 data points - Enter those into your lease calculator and you will see that the monthly payment is 2014$.



But wait, let's say you can only afford 1500$ a month and you have done your analysis on the payback of the asset. Enter 1500$ into your lease calculator and it will show you that to achieve that lease payment the term must be 88 monthly, not 60 months .

Getting the point - its a simple one - understand that if you know the key elements of your lease inputs you can manipulate that info to achieve either the best rate, the best monthly payment, the optimal term of the lease, etc .

The type of analysis we have just done relates to a capital lease transaction - remember we spoke of two types of leases. If you want an operating lease (i.e. use, but not ownership of the asset) our data elements are just the same but you'll find that your overall interest rate on the amount financed will be much lower, because the lessor and you have opted to have the lease company own the asset.

Do we even have to mention that the key driver in the actual interest rate charged is very simply the overall credit quality of your firm when it comes to borrowing.

So what have we covered - simply that you have the ability to manipulate key lease elements to drive a final pricing and structure that works best for your firm. Is there a quicker way to ensure you have all the points covered - there is! Speak to a trusted, credible and experienced Canadian lease financing advisor who can ensure you the final deal is the best deal in commercial equipment leasing in Canada.

Related Articles
  5 Reasons Why Your Competitors Lease Equipment – Achieving Great Leasing Rates On A Commercial Equipt. Loan
  Lease Equipment
  Where to Turn To For Equipment Leasing And Commercial Lease Finance In Canada
  An Unequaled Equipment Leasing & Commercial Financing Option - Your Best Canadian Deal
  What You Need To Know About Equipment Leasing Companies in Canada
  Commercial and Industrial Equipment Leasing Solutions
  The Difference Between A Capital Lease and An Operating Lease
  How To Get The Best Finance Deal When You Lease Equipment from Commercial Leasing Companies
  4 Tips For Best Lease Of Equipment And Commercial Leasing Rates For Canadian businesses
  Equipment Financing Specialist – Canadian Leasing Solutions
  How Financing Options In The Canadian Equipment Leasing Industry Can Benefit or Harm Your Overall Profitability When You Lease Equipment !
  A Perfect Cure? Why Canadian Business Equipment Finance And Asset Finance Via Leasing Create A Tipping Point For Success
  Why Canadian Business is More Greatful than Ever For Equipment Leasing and Financing and asset finance Solutions!
  Equipment Leasing- Types and Advantages
  Lease Financing Canada – Canadian Asset Financing Solutions
  How To Obtain funding and best lease rates for Canadian Equipment Financing Needs
  Considering Canadian equipment leasing ? What Leasing Companies Offer The Best Equipment financing
  Interested In Why Equipment Lease Rates And Low Leasing Payments Might Not Be Important ? !
  How To Review And Save Money on Commercial Equipment Financing and Business Leasing End Of Term Options
  Why Your Competition Is Stampeding To Business Equipment Leasing Financing – Canadian Commercial Finance Advice

Article Tags: commercial, equipment lease rates, interest, leasing



Related Forum Posts
Micro Loans - That's interesting Russell. The following is more information on Micro Loans and anyone within the USA who would like a list of Micro Loan Lenders (listed by State) I have that information! Just let me know and i'll get it out to you in my spare time. The Microloan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $13,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level. Terms, Interest Rates, and Fees: The maximum term allowed for a microloan is six years. However, loan terms vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. The maximum loan amount is $35,000, however, the average loan amount is around $13,000. Interest rates vary, depending upon the intermediary lender and costs to the intermediary from the U.S. Treasury. Generally these rates will be between 8 eight percent and thirteen percent. Collateral Each intermediary lender has its own lending and credit requirements. However, business owners contemplating application for a microloan should be aware that intermediaries will generally require some type of collateral, and the personal guarantee of the business owner. Technical Assistance Each intermediary is required to provide business based training and technical assistance to its microborrowers. Individuals and small businesses applying for microloan financing may be required to fulfill training and/or planning requirements before a loan application is considered. How to Apply: Small businesses that are interested in applying for a microloan should contact a microlender in their area.
Canadian Entrepreneurs...let's chat.... - I thought it would be nice to gather up all the Canadian entrepreneurs on one topic to discuss how everyone is getting along. I just realized Evan is Canadian as well! Hope he's able to join the conversation. Look forward to the chat. By the way, I'm in BC. Phil
Re: Meltdown in the Financial Markets - [quote="Kevin":3lnvm7h2]If the US is simply creating fake/"funny" money with their bailout, then I wonder why the Canadian dollar has dropped so badly? One Canadian dollar is suddenly worth only about $0.84 US now. It doesn't make sense to me.[/quote:3lnvm7h2] The Canadian dollar has dropped to about $0.80 USD... what kind of holiday shopping season will it be this year if this trend continues?
Canadian Entrepreneurs - Hi Evan, I think you should profile Anita from the Body Shop. Is she Canadian? It would be nice to get a Canadian perspective for all of us who are starting businesses in Canada. Do you find th stories of the entrepreneurs vary depending on country? Thanks for all these great stories - it helps inspire us! Jessica
Re: Meltdown in the Financial Markets - If the US is simply creating fake/"funny" money with their bailout, then I wonder why the Canadian dollar has dropped so badly? One Canadian dollar is suddenly worth only about $0.84 US now. It doesn't make sense to me.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Are You Too Good for Your Job?

Build Corporate Credit for Your Small Business

Presenting Yourself With Impact at Work

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.