Equipment Lease Financing Tips to Remember

This article presents essential tips for new businesses

, start-up businesses and established businesses who plan to apply for equipment lease financing. Follow this guide to avoid getting your lease application rejected and avoid unnecessary complications.

Consider your qualifications. Leasing companies have varying standards in approving leases. It's important to make sure that the leasing company you apply to do offer service for you start up businesses like you. Take note that some lessors only finance customers with good credit so if you have bad credit history, you may automatically get rejected.

There are also leasing companies that have restrictions on the types of equipment they will finance. For instance, some lessors will not lease "high risk equipment" such as restaurant equipment, vending machines, ATM machine routes, etc. It is advised to inquire first from a leasing company whether they can provide you lease to obtain the exact type of equipment that you need.

Carefully consider your qualifications prior to submitting your lease application. Keep in mind that in case you get rejected, your credit score will be affected. In addition, each time an inquiry is done in your credit file, your score may drop by a point.

Negotiate for a buyout. At the end of your lease, you, as the lessee must have the option to return the equipment to the leasing company or negotiate to buyout the equipment. A lot of businesses that plan on keeping the equipment after the lease term ends have been able to negotiate a $1 buyout which is a huge saving.

Watch the expiration date. Take note of the exact date that your lease term expires. Place a written reminder where you can always see it or set your smart phone or organizer for an alert. Being aware of your lease term expiration gives you the opportunity to plan your next action and avoid unnecessary penalties or delays.

Choose a lease program suitable with your needs. Equipment lease programs also vary, depending on the leasing company that provides them. Needless to say, there is not one standard lease program that will be suitable for all businesses. Choosing the right lease program will depend on several factors such as the size of your business and your financial situation. You can get an overview about the lease programs offered by visiting the lease company's websites. You can also check out lease broker sites that feature different lease programs available from different lease providers.

Read the fine print. Regardless of how lengthy the equipment leasing contract is, it's important to read each and every statement on this important piece of document. See to it that you are clear about your lessor's policies particularly when it comes to the charges and to special situations (ex. early lease termination), and possible modifications to the terms you initially signed up for. If there are clauses or terms that you do not understand, do not hesitate to ask for more explanation. This crucial step can save you from unnecessary complications later on.

Equipment Lease Financing Tips to Remember

By: Lai Castillo

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