Secrets To obtaining best lease finance rates for equipment leasing in Canada

Do you think there is a big difference in approval success in equipment leasing finance and lease finance rates among different companies? We sure think there are and we're going to show you how to master the information that will allow your firm to achieve equipment finance success.

Most business owners and financial managers in Canada who acquire equipment realize there are much touted significant benefits to equipment leasing. When business owners approach asset acquisition they do it in the view of trying to determine if they should ' lease' or ' buy' the asset in question. The decision often focuses on two issue, is it less or more costly to lease, and finally what are the cash flow advantages to utilizing this type of financing.

Achieving the best lease finance rates comes down to a couple key issues - the overall credit quality of your firm, and more importantly, how you present that credit quality to the lessor. Secondly structuring of your transaction, hopefully with your input. Significantly affects your lease rate. For example a larger down payment will of course drive your overall rate down considerably - i.e. you are financing less.

More often than not a simply first and last payment is all that is required as a sort of down payment or security deposit on your transaction. Other key points that will enhance your equipment lease rates is the importance your place on items such as the ability to return the equipment to the lessor at the end of the term.

How does returning the equipment at the end of term to the lessor become a ' secret ' of great lease finance rates? It's simple, your decision to return the equipment at end of term typically allows you to opt for what is known as an operating lease - as such the lessor makes a bet on the ability to sell or remarket or release the equipment to another party. That type of transaction typically drives the overall lease rate down significantly.

Most business owners are incredulous that in some cases you could actually achieve a ' negative 'lease rate on your transaction! How's that for a great inside tip or secret on equipment lease financing !In the transaction we just detailed it is possible that all your payment don't even add up to the original purchase price of the equipment or asset - due, as we said , to the lessors belief they will get the equipment back . And you should be very happy to let them take that bet and risk, because that becomes the lessor's problem, not yours, you simply benefit from the great lease finance rates on your transaction.

Another more obvious benefit of equipment lease financing is that it's available to all firms, including start ups and firms that might be financially challenged; therefore lease finance rates you achieve are often considerably better than other forms of finance, such as bank term loans, etc.

In many equipment finance transactions the ability of the owner to provide a strong personal guarantee can often enhance the overall pricing of your transaction in your favor, although we acknowledge of course that most business owners would prefer to avoid, not offer up such guarantees.

In summary, it's important to understand how lessors price your transaction, meaning what factors are important to them to create a satisfactory return. Being armed with the ability to properly present your firms overall credit quality, as well as focusing on benefits that are important to your firm that affect lease finance rates is what successful equipment leasing finance is all about.

Speak to a trusted, credible and experienced Canadian business financing advisor to guarantee you will receive the best rates, terms and structures, potentially saving you thousands of dollars on any acquisition via asset finance.

Author:.

Stan Prokop is the founder of 7 Park Avenue Financial . The firm specializes in business financing for Canadian companies     in the areas of working capital , asset based lending, SR & ED tax credit financing, equipment financing,  franchise financing and banking .

 

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