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Leasing has become a preferred form of equipment financing,Guest Posting accounting for more than 30% of business equipment acquisitions. Each year, thousands of U.S. companies face the challenge of finding attractive financing to acquire business equipment. Many of these companies approach the lease sourcing process seeking the lowest lease rate. While securing a low rate is a worthwhile goal in choosing a leasing arrangement, it alone is usually not a reliable standard for obtaining the best lease transaction or leasing experience.
To obtain attractive lease proposals and to avoid lease blunders, make sure you choose the right leasing companies to bid. Ultimately, the wrong lessor choice can result in a slow approval, inability of the lessor to deliver, hidden fees, substandard lease terms, or worst. To secure the best lease arrangement, you must do your homework in pre-qualifying bidding leasing companies. Give this aspect of obtaining an attractive lease arrangement your highest priority.
How Leasing Companies Differ
Leasing companies can vary in a number of ways. Some specialize in specific industries, some in lease types, some in certain equipment types, and still others in transaction sizes. For example, some leasing companies specialize only in a single industry like health care, printing, agriculture, or transportation. Others focus exclusively on a lease type. They may only offer operating leases for equipment with attractive residual values. Some lessors specialize in full-payout finance leases. Still others focus on small ticket transactions with equipment cost under $ 100,000. It is important to understand the specialization of the lessors bidding on your lease transaction. To get the most attractive deal and to avoid the run-around, stick with lessors who focus on the type of transaction you are seeking.
Leasing companies also differ in resources and capabilities. Many large leasing companies are owned by banks, financial companies, or other large industrial concerns. These firms usually have abundant resources and expertise in a number of leasing segments. Mid-size and smaller leasing companies greatly outnumber large lessors. While these companies cannot match the resources of their larger brethren, they often have highly skilled professionals, sufficient resources and more flexibility to meet lessee needs. The goal is to obtain the best leasing arrangement for your firm. By establishing priorities for the leasing arrangement you are seeking, you will be able to determine whether a leasing firm with sizeable resources or one that is nimble and flexible is a better choice.
When And Where To Look
The time to start your search for a leasing company is early in the lease-planning phase, once you have established criteria for a leasing arrangement. Some criteria to consider for a leasing arrangement are: pricing, monthly cash outlay, financial statement impact, the appropriate lease type, lease term, lease flexibility, lease facility size, and whether your equipment will be accepted for lease. Use criteria like these and the qualities you are seeking in a leasing company to start your lessor search.
A great starting point for finding bidding leasing companies is through professional and personal 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 that specialize in your industry or that offer the type of lease you are seeking. Call your industry association and ask whether they have names of leasing companies serving others in your industry.
Another approach is to call a couple of the major equipment leasing trade associations. Major association websites include: www.elaonline.com, www.eael.org, www.uael.org, www.naelb.org, www.aglf.org, www.mael.org, and www.nvla.org. Describe the type of equipment and the industry you are in. Ask whether they are in a position to provide you with a list of members to contact regarding your lease. If you receive such a list, you may need to narrow the candidates based on further homework and the criteria you have established.
Evaluating Leasing Companies
Qualities to look for in any leasing company you consider include: 1) experience and expertise; 2) reputation; 3) ability to perform; and 4) a relationship approach.
Interview prospective bidders carefully. Discuss their expertise and experience in the leasing business. Ask about experience with the type of transaction you are seeking, involvement with similar firms in your industry, and the types of lease products they offer firms like yours. Discuss your equipment needs. Find out whether they will be able to lease most of the equipment you need. Ask whether they will finance your lease using internal funding or whether they will broker the lease to another funding source.
Get enough information from and about bidding lessors to decide whether to include them in the bid process. If possible, ask for financial information from potential bidders to evaluate their financial condition. Also, if you can, obtain a Dunn and Bradstreet report (“D&B”) for each bidder. In the D&B report, look for lawsuits filed against the lessor, judgments, severe payment delinquencies, poor financial performance and similar issues that might impact performance on a new lease transaction.