Leasing has developed into a preferred type of equipment financing, making up a lot more than 30% of economic equipment acquisitions. Each and every year, a huge number of U.S. companies face the challenge of finding attractive financing to obtain business equipment. Many of these companies approach the lease sourcing process searching out the lowest lease rate. While securing a minimal rates are a respectable goal in choosing a leasing arrangement, it alone is generally not only a reliable standard for getting the best lease transaction or leasing experience.
To acquire attractive lease proposals and to avoid lease blunders, ensure you pick the best leasing companies to bid. Ultimately, a bad lessor choice may result in a slow approval, inability of the lessor to supply, hidden fees, substandard lease terms, or worse. To secure the best lease arrangement, you have to do your homework in pre-qualifying bidding leasing companies. Give this element of obtaining a beautiful lease arrangement your highest priority.
How Leasing Companies Differ
Apartment marketing company can vary in many ways. Some focus on specific industries, some in lease types, some using equipment types, but still others in transaction sizes. For example, some leasing companies specialize only in a single industry like medical, printing, agriculture, or transportation. Others focus exclusively over a lease type. They could just offer operating leases for equipment with attractive residual values. Some lessors are experts in full-payout finance leases. Still others give attention to small ticket transactions with equipment cost under A hundred dollars,000. You should comprehend the specialization with the lessors bidding on the lease transaction. To obtain the most tasty deal and steer clear of the run-around, stick to lessors who pinpoint the kind of transaction you would like.
Leasing companies also differ in resources and capabilities. Many large leasing information mill properties of banks, financial companies, and other large industrial concerns. These lenders normally have abundant resources and expertise in numerous leasing segments. Mid-size and smaller leasing companies greatly outnumber large lessors. While these businesses cannot match the time of these larger brethren, they frequently have highly trained professionals, sufficient resources and much more flexibility to meet lessee needs. The aim is to obtain the best leasing arrangement to your firm. By establishing priorities to the leasing arrangement you are seeking, it is possible to determine whether a leasing firm with sizeable resources a treadmill that is nimble and versatile is the perfect choice.
When And Where To Look
The time to start your search for the leasing company is at the start of the lease-planning phase, when you have established criteria for the leasing arrangement. Some criteria to take into account for a leasing arrangement are: pricing, monthly cash outlay, financial statement impact, the proper lease type, lease term, lease flexibility, lease facility size, and whether your equipment will likely be accepted for lease. Use criteria like these as well as the qualities you would like in a leasing company to start out your lessor search.
A great place to start for tracking down bidding leasing companies is through personal and professional referrals. Check with your attorney, your accountant, bank contacts and colleagues in your industry. Also ask friends and acquaintances who use leasing in their businesses. Asked them for contacts at leasing companies which are experts in your industry or that supply the lease you are seeking. Call your industry association and ask when they have been names of leasing companies serving others within your industry.
Evaluating Leasing Companies
Qualities to consider in any leasing company you concentrate on include: 1) experience and expertise; 2) reputation; 3) capability to perform; and 4) a romantic relationship approach.
Interview prospective bidders carefully. Discuss their expertise and experience within the leasing business. Question knowledge about the type of transaction you would like, involvement concentrating on the same firms in your industry, and also the types of lease products they have firms like yours. Discuss your equipment needs. Discover whether or not they are able to lease the majority of the equipment you may need. Ask whether they will finance your lease using internal funding or whether they are going to broker the lease to an alternative funding source.
Get enough information from resulting in bidding lessors to determine if they should include them from the bid process. When possible, ask for financial information from potential bidders to guage their finances. Also, when you can, obtain a Dunn and Bradstreet report (“D&B”) for each and every bidder. In the D&B report, search for lawsuits filed against the lessor, judgments, severe payment delinquencies, poor financial performance and similar problems that might impact performance on the new lease transaction.
Obtain and view customer, vendor, bank and trade references for every lessor. Contact each reference and verify key information presented to you from the lessor. Ask the way the lessor handles its account and whether there’ve been any problems or issues. Ask customer references in regards to the lessor’s power to perform contributing to attentiveness to customer problems and concerns.
Investigate bidders online. Check Google (www.google.com) to determine whether prospective bidders can be found in any newsworthy articles. Hit the message boards and newsgroups. Seek out unresolved problems, fraud, financial problems, testimonials, and awards. Visit bidders’ websites to obtain all the information as you can before extending a party’s invitation to bid. You may be capable of screen out undesirables.
Lastly, make sure prospective bidders participate in a number of industry trade association. While membership alone will not speak for that integrity or expertise of members, the majority of the associations set standards of conduct because of their members.
A Word About Lease Brokers
Lease brokers serve roles similar to insurance brokers. They gain placing lease transactions together with the ultimate financing sources for all those transactions. You should decide whether a lease broker would serve you better than seeking direct bids from lessors. Lease brokers can be useful in finding sources for difficult transactions, due to weak credit or unattractive equipment. They can also be of use in placing transactions that are highly specialized. Only work with lease brokers who’ve high integrity, who’ve a good idea of leasing, and who see the market you have.
The entry bar for becoming a lease broker is comparatively low and never all brokers are very trained or reputable. Check the broker’s references and capabilities thoroughly. Check to see perhaps the broker is among the national trade association for lease brokers, NAELB (www.naelb.org) or to one of the other major equipment leasing associations. Use the same guidelines for evaluating brokers as outlined above for leasing companies.
Parting Words Of Caution
Avoid high-pressure lease sellers. Whether they are brokers or leasing company representatives, chances person being misled or disappointed with all the outcome are extremely high. Only work with lease representatives or brokers who may have an excellent knowledge of leasing and who’re understanding of your preferences. To perform otherwise might result in delays or disappointment.
Avoid giving lease deposits or advance rentals to brokers. Brokers usually do not provide you with the financing directly and, owning your dollars, represent a possible credit risk.
When the lease broker or leasing representative says whatever is really a significant misrepresentation, walk away. Likelihood is the very first such misrepresentation will not be the last. You’ll find a lot of knowledgeable leasing professionals with good integrity. Avoid being with those who are unprofessional.
Lastly, get no less than 3 to 4 lease bids from qualified lessors, when you can. After the morning, lease pricing is market driven. Getting several bids might help give you competitive pricing and terms.
Deciding on the best leasing clients are definitely worth the effort. Through a number of basic steps during the planning and bidding phases with the lease procurement process, you’ll be able to eliminate or decrease time wasted with unqualified lessors. You may also needn’t be the run-around. Allow plenty of time to check carefully out all bidders. Be attracted to lessors rich in integrity, great reputations for performance, good expertise and who communicate well with you. You’ll invest a little time upfront, but you’ll thank yourself later.