Equipment Leasing - Information About How To Use It For Funding Resources For Your Firm

by Arthur Clarkson - Date: 2010-01-04 - Word Count: 521 Share This!

If you're interested in equipment leasing agreements then it should not be tough to source an applicable finance provider. The marketplace for leasing is big and as most equipment can currently be leased it is simply a problem of tracking down a finance provider who deals with equipment leasing. Nearly all of the time the supplier selling the asset does not offer the finance themselves directly, they rely on a third party equipment leasing company. You will often obtain a recommendation from the company selling the equipment to their preferred finance provider.

Similar to all areas of business procurement you should endeavor to source several quotes when selecting an equipment leasing provider. You typically will get a quotations straight from the equipment retailer if the case is straightforward. The costs charged by the recommended finance provider ought to be near to market prices. At all times be practical and recognise that you may not get the most effective quote for your circumstances. The solution is to get at least one other quote and if possible several quotations from other leasing companies as they can have different criteria between them that might result in a much stronger arrangement for you.

Asset finance can be viewed as a far-reaching expression describing the varied methods that are employed to fund the purchase of assets for a firm. In a few scenarios the equipment is not actually owned by the firm because the finance provider retains title to the equipment. The key point from the company owners perspective is that they have the utilization of the asset in return for ongoing payments. Usually what's significant to a firm is that they will utilise an asset, irrespective of whether they actually be the owner of it or not, to enable their company to work effectively and deliver greater levels of profitability.

One type of equipment leasing is where a business signs up to an Operating Lease. In this case the asset belongs to the finance provider who actually rents the asset to the business over an agreed timescale (usually one to 5 years). At the end of the agreed term the lessor will either sell the asset in the second hand market or lease it another time. This means that the lease payments can be kept low as the total asset price will not need to be recovered by the lessor in the first period. At the end of the lease period the asset is either given back to the finance provider or a further lease contract could be negotiated.

A common type of asset finance is called Contract Hire. This is another kind of operating lease and is usually adopted for acquiring vehicles. Most contract hire agreements include a number of possible service features like maintenance, replacement throughout repair, management, etc. When contract hire is employed the finance company retains ownership the asset. The way in which the leasing payments are determined is based on a residual value of the asset after a predetermined period has terminated. This means that the price calculations include a charge to recover the asset depreciation during the course of the rental timescale.

Related Tags: business finance, leasing, equipment leasing, asset finance, asset leasing

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