Tailoring an Equipment Lease to Your Unique Business
Getting the right heavy equipment or commercial trucks is essential for your business. A Canadian equipment lease can help you acquire what you need quickly without breaking your bank account. Before you get started by signing on the dotted line, have you considered how the lease will end? There are many end of lease options, and which one you want depends a lot on your unique business circumstances and plans.
Let’s take a moment to explore your various end of lease options and how to pick the right one for you.
Exploring Your End of Lease Options
There are 4 distinct end of lease options. Within those 4 options, there may be some other options to consider as well. Here are the 4 options you’ll need to choose between and the nuances of each:
1. Purchase – Lease to Own
The most common option exercised at the end of equipment leases would be to purchase the leased equipment. How much the equipment costs to purchase is something you’ll need to consider:
- Fair Market Value: This is the highest purchase price option, but it also reduces your monthly lease payments the most.
- 10% Buyout: You’ll pay 10% of the original lease amount and still see fairly low monthly lease payments. This is the most standard option.
- $1 Buyout: It costs you only $1 to buy the equipment at the end of your equipment lease term. However, your monthly lease payments will be higher.
The great thing about lease to own is that you already know the equipment operation well, it’s history, and the number of hours used. This option is great for those who want to have equipment for the long term and not be paying for it forever.
2. Trade Up
Are you the type that needs the latest and greatest equipment available? Then the trade-up end of lease option might be the one for you. Basically, you’ll trade in your last piece of equipment for a newer model of similar equipment. Lease payments will simply continue at a similar monthly rate.
This is a great option for types of equipment that tend to quickly age or become outdated. At the end of your lease you’re not troubled with getting rid of antiquated equipment. Your equipment leasing company is stuck with that responsibility.
3. Continue Renting Equipment
You could continue to rent the equipment at the same monthly rates you’ve paid all along. This works well if you have a set monthly budget – common to government organization or large corporations. You keep using the equipment under your lease terms, which means tax benefits by keeping capital assets off your books.
The drawback to this option is that your rental payments will not reduce the buyout price if you decide to purchase later. Your equipment lease legally becomes a rental agreement.
4. Return the Equipment
As you make your final payment, the option to simply return the leased equipment is available. Of course, the equipment must be returned in good quality working condition.
This is a good option if you no longer have use for the equipment and don’t want to deal with reselling it.
Which End of Lease Option is for You?
Everyone’s circumstances are different. That’s one of the advantages to equipment leasing. It let’s you obtain equipment on your terms. So go ahead, find the equipment you need and then call Thomcat Leasing to setup the best equipment leasing program for you!