Interim Rent: Equipment Leasing’s Trap Door

Written by George A. Parker


Many lessees enter into lease transactions that they believe are competitive based on faulty rate assumptions. Most lease rate calculations don’t take interim rent into consideration. Interim rent isrepparttar trap door that allows lessors to receive increases in lease pricing. It is unpredictable andrepparttar 111846 amount can be arbitrary. By understanding how interim can impact your lease, you can close this trap door and enjoyrepparttar 111847 lease pricing you thought you negotiated.

What is Interim Rent?

Interim rent, also known as stub rent, isrepparttar 111848 rent that a lessor charges a lessee fromrepparttar 111849 timerepparttar 111850 lessee acceptsrepparttar 111851 leased equipment untilrepparttar 111852 official lease start date. Most leases start onrepparttar 111853 first day ofrepparttar 111854 month following equipment acceptance. In a lease with monthly payments, interim rent is calculated as follows: multiplyrepparttar 111855 number of days inrepparttar 111856 interim period byrepparttar 111857 monthly payment amount and dividerepparttar 111858 product by 30. Inrepparttar 111859 extreme case, interim rent can add almost a full periodic payment torepparttar 111860 lease. In these cases it liftsrepparttar 111861 effective lease rate dramatically.

The impact of interim rent inrepparttar 111862 extreme case can be seen inrepparttar 111863 following example: assume you accept a 36-month lease for equipment that cost $100,000. Also assume thatrepparttar 111864 monthly payment is $3,113 per month, paid onrepparttar 111865 first of each month. Assume thatrepparttar 111866 lease allows you to acquire ownership ofrepparttar 111867 equipment for $1 at lease end. Therefore, your effective lease rate is 8%.

Now assume thatrepparttar 111868 interim lease period is 29 days. For simplicity sake, we will roundrepparttar 111869 period to a full month and add it torepparttar 111870 lease. The new effective rate for 37 payments of $3,113 is 9.7%. The new rate is more than 20% higher thanrepparttar 111871 rate originally quoted byrepparttar 111872 lessor. This higher rate represents a trap door in your lease that produces more cost for you and a higher return forrepparttar 111873 lessor.

The Purpose of Interim Rent

Many lessors justify interim rent as compensation for obligating themselves to pay equipment vendors on behalf of lessees in connection with lease transactions. As further justification, these lessors point out that lessees have use ofrepparttar 111874 equipment duringrepparttar 111875 interim period.

Problems with Interim Rent

There are two flaws inrepparttar 111876 reasoning offered by these lessors. First, interim rent is exorbitant since it is based uponrepparttar 111877 periodic lease payment instead ofrepparttar 111878 lessee’s borrowing rate. Since each lease payment has a return-of-capital component,repparttar 111879 periodic payment is not an appropriate standard to use for interim rent calculations. A calculation based onrepparttar 111880 lessee’s borrowing rate is probably a fairer measure.

The Awful Truth about Annuity and Insurance Leads

Written by Bill Broich


You seerepparttar websites, you seerepparttar 111845 ads: exclusive, never before sold, prospects eager to buy, insurance and annuity Leads. Some leads cost a few dollars - others are over one-hundred a pop.

I was curious, just how good are these insurance and annuity leads? I decided to find out.

I’m not going to name specific insurance and annuity lead websites, but I will give you a summary of how it all shook out.

Insurance and Annuity Lead Website A:

Cost: Cheap

Results: Terrible. 10% ofrepparttar 111846 leads my staff called got number no longer in service recordings. The rest:repparttar 111847 people had no idea what we were talking about. They were not interested in annuities, insurance or investments, nor did they remember filling out a request for information form onrepparttar 111848 internet.

Sales: 0

Insurance and Annuity Lead Website B:

Cost: Average

Results: Terrible. Prospects didn’t recall filling out request for information on anything related to annuities, insurance or financial planning. Most just hung-up.

Sales: 0

Insurance and Annuity Leads Website C:

Cost: Expensive

Results: About twenty percent remembered filling out a request for info. However, they had been called numerous times by different agents. Most were getting sick and tired ofrepparttar 111849 calls. A few had begun working with other agents. Most hung-up angrily.

Sales: 0

I spent two-thousand dollars on this experiment. I did not find one-receptive buyer. I had thrown away my money, not to mention time spent by my phoning staff to contact these “hot prospects”.

Whatrepparttar 111850 heck was going on? How could these websites sell such garbage?

I poked around, wrote a few e-mails to ‘industry experts’, not surprisingly, nobody got back to me. Luckily, I did end up making contact with a marketing person who had previously worked for a big lead selling outfit. She gave merepparttar 111851 juicy details of howrepparttar 111852 majority of these lead companies operate, whether it is insurance leads, long-term care leads, annuity leads, or MLM/Work-from-Home leads. They all employrepparttar 111853 same methods.

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