So you recognize that leasing equipment is important and it is available to you to use as a financing option but why aren’t medical equipment leasing rates an important factor? Isn’t it all about payments and costs?
How can medical equipment leasing rates not be the most important factor when considering leasing as an equipment acquisition strategy? That is what clients usually ask when they are advised that while looking for the best available leasing rate is important, it shouldn’t be the sole determinant of making a lease financing decision.
Leasing has been around for many years and the reason why it is not going anywhere is the fact that after the mortgage meltdown, small business lending took a nosedive. Banks were not lending and in 2009, small business loan volume dropped to 42%. SBA loans were not far behind because lending also fell by 36%.
Even as things began to improve in late 2009, the overall results of these efforts are mixed and many companies prefer leasing as a method of acquiring essential equipment needed to help their medical facilities grow.
As a health care facility owner, it would be wise for you to realize that leasing medical equipment is clearly one of the most viable methods of acquiring equipment. The main reason why this statement is true is because:
- It is a straightforward and easy process. Leases are usually approved within 24 hours.
- It does not include a lot of paperwork as you would expect when applying for a loan from a financial institution
- It does not have any strict covenants that you have to adhere to
- You can get approved even with a damaged credit score
- You can enjoy tax benefits
- You can preserve your cash flow
- You do not need to make down payments, pay upfront cash or provide any form of collateral
Leasing medical equipment encompasses all types of equipment ranging from lab equipment, computers, MRI machines, X-ray machines, ultrasound systems, patient monitoring equipment, etc.
Why Medical Equipment Leasing Rates Aren’t Important
Medical equipment leasing rates aren’t important because if you do not factor in other key elements in your equipment lease, the last thing you will have to worry about once you sign on the dotted line is your rate.
Uncapped interim rent for instance, is one of the factors that you should consider. When leasing medical equipment, many people overlook interim rent. Many equipment leasing companies charge interim rent for equipment that has been accepted and delivered before the official leasing period has began. If the interim rent is left uncapped, it can transform your lease agreement into one very costly transaction.
Buy-out options are also another important factor to consider other than medical equipment leasing rates. You might think that you will return the equipment on time so the absence of a buyout option might not seem like a big deal at first. Many lessees come to discover that it is actually a big deal especially when they are unable to return the equipment on time. This, more often than not, leads to unwanted lease extensions.
Stringent return requirements are also something to keep in mind when reviewing your lease agreement. Some leasing companies only seek to extend your lease by including leasing language that makes compliant return of equipment nearly impossible. They usually phrase end-of-lease-options in such a way that it results in lease extensions.
Relax, You Can Choose Your Own Medical Equipment Leasing Rates
That’s right. You can choose your own medical equipment leasing rates thanks something called credit scores. Your overall credit score can give you an upper hand when negotiating medical equipment rates. The higher it is the more leverage you have. Many equipment leasing companies use credit scores as a way of determining if potential lessees are able to make monthly lease payments in full and on time.
If you have a damaged credit score, then this should not worry you because most leasing companies have programs specially designed for lessees who have damaged credit. Always work with companies that offer leasing to lessees with damaged credit scores. Sending out several applications to different leasing companies in the hope that one of them will approve your application is a big mistake. The result will be several hard credit inquiries that will further damage your credit score.
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