Leasing Programs FAQ's
Q Can my lease be cancelled or paid off early?
A You can trade in your current equipment for new, leased equipment before the expiration of the initial term (subject to credit approval). Of course, any balance from the old lease can be rolled over in the new lease for your convenience.
Q What is the interest rate in this lease?
A Since you are leasing and not taking out a bank loan to finance your purchase, there is no “interest rate” as we usually think of one. It’s more like leasing office space. You’re paying to rent the equipment, with the monthly payment amount based on the type of leasing plan you choose, the terms of the lease, and the cost of the equipment.
Q What should I do if I have a problem with the equipment that I leased?
A The vendor providing the equipment is solely responsible for any service or warranty issues. Our role is to assist you in financing the equipment, the same way a bank would finance a car.
Q Why did you request my personal guaranty?
A We make fast, accurate credit decisions based on the limited information requested on our convenient credit application. We check publicly available information, and have found that credit bureaus are the most accurate and reliable. We’ve also found that smaller businesses have payment practices similar to those of their principals.
Q When is my payment due and what is Interim Rent?
A After we confirm that the equipment has been delivered and we’ve received all the required documents, your equipment supplier is paid. We then set up the lease contract on our billing system and an invoice is sent to you for the first payment due. This payment covers the following full 30-day period. Included on the first invoice is a charge for interim rent, which covers the period between when we pay your vendor, and when the first lease payment is due.
Q Why am I required to insure my leased equipment?
A Since we own the equipment and the lease is for its use, we must ensure that if the equipment is destroyed or stolen, our lease will be paid off from the proceeds of the insurance policy. Most commercial policies cover leased equipment; all you need to do is have your insurance agent forward us an endorsement at no cost to you.
Q What happens at the end of the lease term?
A Unless you have chosen one of our fixed purchased option plans, you are responsible for returning the equipment in good working condition within 30 days of your last payment due date. If you do not return the equipment, you will be billed on a monthly basis. If you chose a fixed purchase option, you must exercise your rights within 30 days of the last payment due date.
Q What taxes am I responsible for?
A In most states and some local jurisdictions, we are required to pay a use tax on each monthly payment. Since the lease payment was calculated in advance, and these rates change from time-to-time, this amount is billed separately. In certain states, the full amount of taxes is due to the inception of the lease, and the responsibility to do so falls on us. In these situations, the tax is added to the equipment cost to calculate the monthly payment.
Many states also charge an annual tax on tangible personal property. Since we are the legal owner of the equipment, we are required to pay this tax. (Our lease rate does not include these costs.) We pass this cost on to you in either a lump sum or spread over 12 monthly payments. Again, these taxes change periodically and are not included in the calculation for the base payment.
Q What are the tax benefits associated with leasing?
A From you, the lessee’s viewpoint, you may be able to deduct the monthly payment as a business expense on your tax returns. You should seek specific advice form you accountant. From our perspective as the lessor, unless you chose a $1.00 buyout option, you agree that we hold legal title to the equipment and is entitled to any tax benefits associated with ownership.
For additional information contact:
James D. Lowe, Sr. Partner