What to Expect From the Equipment Leasing Process – Start to Finish
Looking to purchase new or used equipment for your business? Wondering if leasing is right for you? Interested, but not sure what the process looks like? You’ve come to the right place. We’ll walk you step-by-step through the lease process and get you on the road to making an informed decision.
Step One: Find It
Determine what your business’s equipment needs are. Do some comparison shopping to ensure you have a good feel for fair market value. Keep in mind that new or used, online or private, auction or dealer, it’s almost all leasable.
Step Two: Additional Costs
Establish additional costs like inspections, shipping, and customs if applicable. A quality equipment leasing company will arrange these things for you and roll the cost into your lease.
Step Three: Get a Lease Quote
Find a reputable equipment leasing company and get a payment quote. This is a useful estimate of your monthly payments/overall costs and can be done quickly and easily – often online and with minimal information.
Step Four: Apply for Your Equipment Lease
Apply and get pre-approved for your equipment lease with your lease broker. Note that pre-approval is an especially important step if you are anticipating purchasing your equipment through an auction or online platform. Even if you are purchasing from a dealership, it’s pretty important to know your approval status before making a deal. You’ll be a much more attractive buyer if you can show that you already have the means to pay for your purchase. Plus, you will certainly get better lease terms by arranging financing from a 3rd party before-hand.
Step Five: Documentation
Get your financial documents in order like recent banking statements, net worth information (assets and liabilities), and your previous years tax return. You might need them and things move a lot faster when you are prepared.
It’s worth noting that leasing is pretty paperwork-light compared to a bank loan, but with any financial agreement there will be basic financial documents required.
Now is also the time to arrange special terms like custom payment structures (for example increasing your monthly payments during your busy seasons and lowering them during your slow seasons) and end of lease agreements with your lessor. You may want to inquire to your lessor about zero down and/or 90 days no payments.
Step Six: Buy It
Purchase your equipment. Inform the seller that you have arranged leasing and to send your lessor the invoice. Your lessor will review the asset and pay the purchase order. Money is sent to the seller that day.
You will now make your first payment on the lease unless other arrangements have been made.
Step Seven: Get It
Put your additional equipment to work. The full benefits of the lease structure become clear at this point. You can use the equipment while you’re paying for it. No digging into your business savings. This puts your business in a position to be able to cover the cost of the lease with the new income generated by the equipment – often enabling the new purchase to pay for itself.
Come tax time, you will be able to write-off your lease payments as a business expense – saving you even further.
Step Eight: Optional Early Buyout
It’s been several months of making your lease payments, and now you are nearing the end of your lease term. Under most agreements, you will be on the path of lease-to-own. In these cases, you may want to consider an early buyout if that option exists. An early buyout could save you several months of lease payments and you will get complete ownership of the equipment.
The “Early Purchase Option” will be a set amount and can only be done before your lease term ends. Since it has to be done before your lease ends, you will want to set a calendar reminder to call your lease broker.
Not all lease agreements will have an early buyout option. Back in Step Five you would’ve decided on your end of lease terms. If you have any questions about this though, call your lease broker.
Is Equipment Leasing Right for Me?
Leasing is a powerful and flexible financing tool. Done right it can save you a huge amount of hassle and free up your business’s cash flow for other expenses. It’s not right for everyone and every situation though. You need to talk your options through with a good lease broker.
Give the friendly team at Thomcat Leasing a call today (1-877-846-6228). We’ve helped hundreds of small and medium sized businesses find a way to afford the equipment they need. Business growth is within your reach. Try our 60 second lease estimate and find out how affordable leasing can be!