Questions To Ask Your Equipment Leasing Dealer
If you’re a business owner in need of new equipment, you’re likely considering equipment leasing as a cheaper and more efficient option than simply buying the equipment outright. Still, before you decide on a leasing company, you’ll want to have a few questions answered. This will help choose the right lessor for your needs.
First, you’ll want to know if the financing terms are negotiable. Leasing is considered more flexible than other types of financing such as loans, so there should be more room for you to work out a payment schedule. Having a good business credit score may also help you negotiate a better rate. You can also try for a longer-term lease and reduce payment amounts that way. Perhaps you can handle a “step-up lease,” which allows you to begin with low payments and increase the amount in successive installments. If you want to add more equipment onto a lease you already have, you could consider a “master lease.”
You should also check how familiar the leasing company is with the kind of equipment you want. Some companies specialize in equipment leasing for different professions, so if you’re looking for construction equipment, you won’t go to a company that leases equipment for restaurants. A lessor with a track record in dealing with your industry will also be equipped to help you pick out the right equipment. For that same reason, see if your lessor offers good consultation and support. You’ll want a leasing company that’s willing to partner with you and not be stand-offish.
Tax incentives can also be a factor. Your business can claim depreciation if you take out a traditional loan, coupled with a down payment and a higher interest rate. If you’re engaging in equipment leasing, the lessor can claim depreciation, but you’ll get a lower APR, typically half of a traditional loan. If you’re still concerned about using depreciation credit, you should ask about capital leases or other financial options.
Finally, it is always good to know the business details of your prospective lessor. Ask the leasing company for references. Getting a good track record of parties that will vouch for the lessor will make it easier to make a decision. Also, ask how much the lease financing will require up front, as you may need to shift your budget around to make a down payment. Lastly, check the payment process itself. Will the leasing company put you through lots of paperwork? A lean and efficient payment system will make equipment leasing a painless affair for you.