A good equipment leasing deal can make the difference between losing money and making it.
A recent survey has clearly indicated that 8 out of every 10 bank loans applied are usually rejected by the banks. Confronted with a number of other options, then it’s advisable to acquire your business equipment by leasing since most of the companies that offer this service don’t require you to have financial statements.
Before you close your equipment leasing pact, how can you tell if you have selected the right equipment leasing company? How can you tell if whatever you have is actually a good equipment leasing deal?
How To Know You Have A Good Equipment Leasing Deal
High Residual Value
First and foremost, if you are looking for a good equipment leasing deal,the key factor to look for is the residual value–especially if you are leasing a car. By definition, residual value is the predicted value of equipment at the end of a lease term. Usually, this “perceived value of equipment” is set by leasing information providers or the bank that has been appointed by the lessor to write the lease contract.
Now this explains why residual value is generally considered important: higher residual value can actually be translated to mean lower monthly payments. And once you completely understand how residual value works, you can be able to explain the different between leasing two similar items. For example, by leasing equipment with low depreciation rate, you’ll be paying less since such equipment has higher residual value than its counterpart.
So if the equipment in question has a higher residual value than its alternative, relax—what you have is a good equipment lease deal.
Competitive interest rate
A higher residual value will get you a good deal, but if the interest rate of the underlying company is not competitive; that deal is not good enough for you. More importantly, you must be conversant with most of the terms that sales people use in equipment leasing, since they are way different from some of the terms used in actual buying. For instance, most leasing company like referring to interest rates as ‘money factors’ or ‘lease factors’, and if you can get these terms right, you might miss out a crucial segment of getting yourself a good lease deal.
As such, if you’re not prepared to negotiate the interest rates simply because you are not conversant with the terms used, you can call a finance manager or a broker from a reputable dealership to find out if better interest rates are still available. Similarly, you can still use finance managers to find out if the equipment leasing deal that you’ve already secured is laudable enough.
Low fees
For leaseholders who want to improve their lease deals, they can still request the underlying companies to either remove or reduce some fees on their contracts. Again, they can shop around for a company with the lowest fees, since some fees–like disposition fees, acquisition fees, and security deposits–usually vary from company to company. And since it doesn’t hurt to question the leasing companies on why they are imposing certain fees on their deals, don’t hold yourself from negotiating your way off. If you are lucky, you can get the security deposits and some other fees lined off your contract.
Now, with that in mind, you can compare the fees imposed on your lease contract with that of other companies to determine whether the deal that you have is either good or not. If the fees imposed are not that low, then you missed a chance while getting yourself a better deal.
Customer Retention
From a logical point of view, a good company knows how to retain its customers. And if a page can be plucked from that, an equipment leasing company that only retains a small fraction of its customer base year after year is unequivocally overcharging its customers or has a hostile lease structure. Walk out. On the same note, you can try inquiring from the previous customers of the company in question to get to the bottom of what exactly made them leave. If you’re fortunate enough, they might even point out another company that has a more favorable deal.
Finally, if your deal doesn’t allow you to transfer the lease contract to someone else before the contract ends, then it’s certainly not that good. You can still get another better deal. Apparently, leasing companies are nowadays offering more flexibility–especially if you are leasing a car; and if your company has not been providing that; then you still have some room for negotiation.
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