Equipment leasing - what it means and how to use it for funding assets for your organization

If you're in the market for equipment leasing then it should not be troublesome to locate an acceptable finance company

. The market for leasing is big and since nearly all equipment can currently be leased it is simply a task of tracking down a finance company who works with equipment leasing, such as the Asset Finance Group. Most of the time the company selling the asset does not supply the finance themselves directly, they depend upon a third party equipment leasing company. You can typically obtain a recommendation from the company selling the equipment to their preferred finance company.

It is good judgment to get several quotations for equipment leasing. You typically will get a quote straight from the equipment dealer if the situation is simple. This should be a competitive price as the vendor is incentivised to make sure that they'll produce sales of their equipment. At all times be sensible and realise that you may not get the best quote for your circumstances. Look around and obtain multiple quotes from different companies.

Asset finance is a wide-ranging expression describing the various methods that are employed to support the acquisition of assets for a firm. In a number of scenarios the assets are never really legally owned by the firm because the finance provider keeps title to the asset. The key purpose from the company owners perspective is that they get the utilization of the asset in return for regular payments. Generally what is significant to a company is that they'll utilise an asset, no matter whether or not they directly be the owner of it or not, to enable their company to operate effectively and deliver greater levels of success.

One type of equipment leasing is where a business commits to an operating lease. In this situation the asset belongs to the finance company who in effect hires the asset to the lessee over an agreed timescale (usually one to 5 years). At the end of the fixed term the finance provider can either sell the asset in the second user market or lease it for a second time. This means that the lease payments will be kept low since the full asset worth will not need to be recovered by the lessor in the first period. At the end of the lease term the asset is either returned to the lessor or a further lease agreement may be agreed.

A familiar type of asset finance is known as contract hire. This is a different kind of operating lease and is often used for acquiring vehicles. Most contract hire contracts include a number of possible service features including maintenance, replacement during repair, management, etc. When contract hire is employed the lessor owns the asset. The method in that the rental payments are determined relies on a residual price of the asset after a predetermined timescale has ended. This implies that the cost calculations incorporate a charge to recover the asset depreciation during the course of the hire period.

Equipment leasing - what it means and how to use it for funding assets for your organization

By: Sandy Elliot

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