Negotiating for better equipment financing rates is a skill that you must have. If you are used to getting good deals through your negotiating prowess, you probably think that you are doing a reasonable job of negotiating.
The truth is you can do better when you hire a professional to help you negotiate a better lease. If you are inexperienced, you need even more help. On the other hand, you can choose your equipment rates. We explain how this is possible by examining ways you can negotiate for better equipment financing rates.
How To Get Better Equipment Financing Rates
You Can Hire A Lease Broker
Most equipment lease brokers are well connected and know the ins and outs of the leasing industry. They know which equipment leasing companies specialize in your type of equipment and which ones offer the most competitive rates.
A broker will benefit you in a number of ways. First of all, they will save you the time and energy of researching and reviewing leasing companies for the best lease quotes.
Lease brokers, however, come with certain disadvantages. First, they do not put your interests first because they are after the commission. Some brokers will submit your information to several leasing companies in the hopes that one of them will give in and offer you a lease.
Remember that most equipment leasing companies usually do credit checks on potential lessees. Not all of them will do soft credit pulls which have virtually no impact on your credit score; some will do hard credit checks which can potentially lower your credit score by as much as 150 points. Some companies have modified their systems to automatically reject prospects that have had more than a certain number of credit checks within a certain period of time.
When your credit score goes down, you lose your bargaining power and you are no longer in a position to demand for the best equipment financing rates available.
Most lease brokers will do whatever it takes to get your lease application approved including overlooking some crucial contract details. Although they may negotiate a lease with the lowest rate, it is not the only thing that you should consider. Consider other factors such as flexibility of the lease, hidden costs, renewal, etc.
You Can Hire A Lawyer
Typical businesses hope that they can get by with minimal legal assistance. When it comes to negotiating equipment financing rates, try to involve your lawyer as early as possible rather than after you have signed the lease and your hands are tied.
Once the lease gets signed, you have already made a commitment. Although your lawyer may try to re-open important issues, it is an ineffective way of getting better rates.
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Lawyers are capable of identifying any loopholes or unacceptable terms in your lease even before you sign the contract. They will ensure that your rights are protected during negotiations and can suggest rewrites to some of the clauses. Unlike a lease broker, your lawyer will put your interests first. So even if you are a start up business and you cash flow is very tight, you should consider hiring a lawyer because it will lead to peaceful co-existence with your lessor and you will save a lot of money in the long run.
Renegotiate Your Lease
If you are locked in a bad lease, you still have the leverage to renegotiate especially in these hard economic times. Most equipment leasing companies include clauses in their contracts that allow lessees to terminate their leases early. Although you might get penalized for this, at least you will not have to put up with a bad lease.
Some negotiating tactics are also better than others; it all depends on your approach. For instance, it is much easier to negotiate a 90 day referral than to get your monthly lease payments reduced for the rest of the lease term.
Hiring someone to negotiate better equipment finance rates on your behalf may at first seem like an added cost but you have to consider what is at stake. They will help you uncover hidden fees and dishonest leasing companies. A good credit score can also heighten your chances of landing on better rates because it shows you are capable of making the monthly payments on time.
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