As you consider the form of capitalization for your new equipment, there are several factors you should bear in mind. Financing should be seen as a tool having many benefits to you, the owner. Below are several benefits to consider when choosing your financing option:
- An equipment lease is accounted for different than a loan. It provides attractive tax, as well as, other benefits that a loan doesn’t. Because it is not a loan, you won’t find any reference to “interest.” on our lease documents.
- Our leases are financing tools. As such, there are carrying charges involved but we are always very careful not to call them “interest.” Our carrying charges are very competitive.
- If you compare our leasing rates to a business bank loan, the lease rate would be very close to an otherwise comparable bank loan transaction (Remember that we write fixed-rate leases, so you should always compare leasing rate to a fixed-rate term loan at the bank).
- Most of the leases we write work out to be in the “middle teens” if expressed as a percentage. Bigger tickets and longer terms can be in the very low teens, and sometimes as low as just 6% to 7% or less.
- That being said, we think it is a mistake to think only about the apparent “percentage rate” on a lease transaction. There are several significant differences between our leases and commercial bank loans, some of which are far more significant than a percentage point.