What should you know about leasing laundry machines? Is it as straight forward as you think?
While buying laundry machines can be preferable at first thought, your business risks locking up capital that could have otherwise been used to generate or improve cash flows. This means the certain companies are better off leasing laundry machines.
Apart from easing the company’s cash flows, leasing laundry machines can also present you with other advantages such as waiver of maintenance cost, flexible lease payments and renegotiable contracts among others that combine to enhance your business’s financial position.
Steps To Leasing Laundry Machines
First off, you must identify the equipment that you can purchase outright and those that will leave a strain on your operating finances. Such machines include washing machines, shirt finishing equipment, dry cleaning equipment, chillers, iron boxes, spotting tables, pressing machines and dyeing machines among others.
After making a list of all the equipment that you can lease, contact the various companies that deal in leasing laundry machines. Such companies can be exclusively rental companies, bank or finance companies and machine vendors that can arrange a leasing contract.
Next, you will need to choose a financing arrangement that is suitable to your business. The main factors to consider are the lease payment amount, frequency of payment and how they will impart your business’s cash flows within the repayment period.
There are two main types of leases that apply to leasing laundry machines. The first is a true lease and the second is a buyout lease. The latter allows you to own the machine at the end of the leasing period. In effect, lease payments include capital payments toward purchase of the equipment. This lease is only suitable for equipment with a considerable usage period.
As for the former, you only commit to making rental payments. You have to return the equipment at the end of the lease period. This lease arrangement is suitable for equipment with a short life span thus saving your company money that they would have otherwise been tied in unusable collateral.
The third stage may require an expert analysis especially for complex lease contracts where financial companies are involved. You have to compare and contrast leasing and purchasing costs. It may be cost effective to take out a loan and purchase the equipment then repay the loan using excess cash flows generated from the business.
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Finally, having evaluated all the necessary conditions, you can start the process of leasing laundry machines. Read all the fine print. Sometimes, you will have to negotiate with the leasing company when it comes to the interest rates or plainly the rental payments applicable.
Of course it goes without saying that every business would need the best deal when it comes to leasing laundry machines. It is for this reason that you must conduct your own research really well when looking for a leasing company and during lease negotiation.
How To Obtain The Best Laundry Machine Leasing Deal
It goes without saying that any company looking to lease laundry machines desires the best deal that it can obtain. However, desire alone is not enough. As a prospective lessee, you must satisfy the requirements of the prospective lessor.
The lessor will be on the lookout for your company’s credit rating, cash flow position and of course the asset under consideration. The equipment finance company makes a balance between the risk in financing the lease and making a profit. The prevailing market rates will also definitely play a part.
Obtaining the best deal begins with doing enough research from the companies that offer the best deals. Some companies will be generally more expensive than others. Others will offer incentives such as periodical servicing of the equipment or maintenance and free training on how to operate the equipment among others.
Your lessor is primarily concerned with your ability to meet your monthly or periodical financial obligations so an updated financial statement will be required. This is just a tip of the ice berg because there are many more factors to consider when leasing laundry machines.
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