Leasing has become a preferred form of equipment financing, accounting for more than 30% of business equipment acquisitions. Each year, thousands of U.S. companies face
challenge of finding attractive financing to acquire business equipment. Many of these companies approach lease sourcing process seeking 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 best lease transaction or leasing experience. To obtain attractive lease proposals and to avoid lease blunders, make sure you choose right leasing companies to bid. Ultimately, wrong lessor choice can result in a slow approval, inability of lessor to deliver, hidden fees, substandard lease terms, or worst. To secure 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 specialization of lessors bidding on your lease transaction. To get most attractive deal and to avoid run-around, stick with lessors who focus on 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 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 best leasing arrangement for your firm. By establishing priorities for 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 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, appropriate lease type, lease term, lease flexibility, lease facility size, and whether your equipment will be accepted for lease. Use criteria like these and 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 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 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 type of equipment and 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 candidates based on further homework and 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 leasing business. Ask about experience with type of transaction you are seeking, involvement with similar firms in your industry, and types of lease products they offer firms like yours. Discuss your equipment needs. Find out whether they will be able to lease most of equipment you need. Ask whether they will finance your lease using internal funding or whether they will broker lease to another funding source.
