Leasing has developed into a preferred way of equipment financing, accounting for greater than 30% of commercial equipment acquisitions. Each year, a huge number of U.S. companies face the task to find attractive financing to accumulate business equipment. Many of these companies approach the lease sourcing process looking for the lowest lease rate. While securing a low rate is an advisable goal in picking a leasing arrangement, lease ups alone is normally not really a reliable standard for obtaining the best lease transaction or leasing experience.
To obtain attractive lease proposals and to avoid lease blunders, be sure to choose the best leasing companies to bid. Ultimately, an unacceptable lessor choice may result in a pokey approval, inability in the lessor to deliver, hidden fees, substandard lease terms, or worse. To secure the very best lease arrangement, you must do your research in pre-qualifying bidding leasing companies. Give this part of obtaining a stylish lease arrangement your highest priority.
How Leasing Companies Differ
Leasing companies may vary in many ways. Some specialize in specific industries, some in lease types, some in some equipment types, yet still others in transaction sizes. For example, some leasing companies specialize only in a single industry like medical, printing, agriculture, or transportation. Others focus exclusively with a lease type. They may just offer operating leases for equipment with attractive residual values. Some lessors concentrate on full-payout finance leases. Many others concentrate on small ticket transactions with equipment cost under A hundred dollars,000. You should see the specialization from the lessors bidding on your own lease transaction. To find the most tasty deal also to stay away from the run-around, stick with lessors who target the type of transaction you are searching for.
Leasing companies also differ in resources and capabilities. Many large leasing publication rack properties of banks, financial companies, or another large industrial concerns. These lenders normally have abundant resources and knowledge of a number of leasing segments. Mid-size and smaller leasing companies greatly outnumber large lessors. While these businesses cannot match the resources of these larger brethren, they generally have professional professionals, sufficient resources plus much more flexibility in order to meet lessee needs. The goal is to receive the best leasing arrangement on your firm. By establishing priorities to the leasing arrangement you would like, you’ll be able to ascertain whether a leasing firm with sizeable resources a treadmill that is nimble and flexible is the perfect choice.
When And Where To appear
Time to start out your search for a leasing business is at the outset of the lease-planning phase, once you’ve established criteria for the leasing arrangement. Some criteria to consider to get a leasing arrangement are: pricing, monthly cash outlay, financial statement impact, the right lease type, lease term, lease flexibility, lease facility size, and whether your equipment will likely be accepted for lease. Use criteria genuinely as well as the qualities you would like inside a leasing company to get started on your lessor search.
A fantastic place to start for locating bidding leasing companies is thru professional and personal referrals. Consult your attorney, your accountant, bank contacts and colleagues with your industry. Also ask friends and acquaintances using leasing of their businesses. Asked them for contacts at leasing firms that focus on your industry or offering the type of lease you are looking for. Call your industry association and enquire of when they have been names of leasing companies serving others within your industry.
Evaluating Leasing Companies
Qualities to watch out for in almost any leasing company you consider include: 1) experience and expertise; 2) reputation; 3) ability to perform; and 4) a partnership approach.
Interview prospective bidders carefully. Discuss their experience and expertise inside the leasing business. Inquire about knowledge of the kind of transaction you are seeking, involvement concentrating on the same firms inside your industry, as well as the types of lease products they provide firms like yours. Discuss your equipment needs. Learn whether can lease almost all of the equipment you need. Ask whether they will finance your lease using internal funding or if they are going to broker the lease to an alternative funding source.
Get enough information from resulting in bidding lessors to decide if they should include them within the bid process. If possible, request financial information from potential bidders to evaluate their finances. Also, if you possibly could, obtain a Dunn and Bradstreet report (“D&B”) per bidder. In the D&B report, search for lawsuits filed up against the lessor, judgments, severe payment delinquencies, poor financial performance and other conditions that might impact performance on the new lease transaction.
Request and look customer, vendor, bank and trade references for each and every lessor. Contact each reference and verify key information directed at you by the lessor. Ask what sort of lessor handles its account and whether there’ve lots of people any problems or issues. Ask customer references regarding the lessor’s power to perform resulting in attentiveness to customer problems and concerns.
Investigate bidders online. Check Google (www.google.com) to view whether prospective bidders can be found in any newsworthy articles. Hit the message boards and newsgroups. Look for unresolved problems, fraud, financial problems, successes, and awards. Visit bidders’ websites to obtain as much information as you can before extending a party’s invitation to bid. You may be capable to screen out undesirables.
Lastly, make sure prospective bidders belong to a number of industry trade association. While membership alone doesn’t speak for that integrity or expertise of members, most of the associations set standards of conduct for his or her members.
A thing About Lease Brokers
Lease brokers serve roles much like insurance brokers. They gain placing lease transactions with the ultimate financing sources for the people transactions. You must decide whether a lease broker would serve you better than seeking direct bids from lessors. Lease brokers can be handy in locating sources for difficult transactions, due to weak credit or unattractive equipment. They also can be appropriate in placing transactions that are highly specialized. Only use lease brokers who’ve high integrity, who have a good understanding of leasing, and who view the market you have.
The entry bar for becoming a lease broker is pretty low and not all brokers are trained or reputable. Check the broker’s references and capabilities thoroughly. Determine whether or not the broker is among the national trade association for lease brokers, NAELB (www.naelb.org) or among the other major equipment leasing associations. Make use of the same guidelines for evaluating brokers as outlined above for leasing companies.
Parting Words Of Caution
Avoid high-pressure lease sellers. Whether or not they are brokers or leasing company representatives, chances people being misled or disappointed using the outcome are incredibly high. Only help lease representatives or brokers who have a fantastic comprehension of leasing and who will be responsive to your requirements. To perform otherwise might bring about delays or disappointment.
Avoid giving lease deposits or advance rentals to brokers. Brokers usually do not give you the financing directly and, owning your money, represent a potential credit risk.
When the lease broker or leasing representative says whatever creates a significant misrepresentation, walk away. Likelihood is the initial such misrepresentation will not be the very last. You will find way too many knowledgeable leasing professionals rich in integrity. Avoid being with those who are unprofessional.
Lastly, get no less than three or four lease bids from qualified lessors, if you’re able to. Following the day, lease prices are market driven. Getting several bids can help give you competitive pricing and terms.
Selecting the most appropriate leasing firm is worth the effort. By taking a number of simple actions through the planning and bidding phases in the lease procurement process, you’ll be able to eliminate or decrease time wasted with unqualified lessors. You can also don’t get the run-around. Allow enough time to check carefully out all bidders. Be keen on lessors rich in integrity, great reputations for performance, good expertise and who communicate well along. You may invest some time upfront, but you’ll be thankful later.