Choosing an Equipment Leasing Agreement and Comparing Costs

As the owner or manager of a business, one of the most important decision you may have to make is procuring or upgrading vital equipment. And if you are more inclined on leasing rather than purchasing, choosing the right leasing company is crucial.

Leasing Contract

When deciding whether or not an equipment leasing firm is right for you, check their leasing arrangement offers.

The simplest offer will probably function as a loan replacement. The lessor will buy the needed equipment, which is deemed yours within the duration of the lease. You make regular payments within this timeframe, and upon closing, you pay a small residual fee. This type of arrangement is referred to as a capital lease.

But why would you go for a capital lease rather than a loan? The interest you pay for a capital lease is often bigger than what you would for a loan, but a capital lease will already cover the overall cost of the equipment, and even all other accompanying costs, such as for transportation and installation. Know more about medical equipment at https://edition.cnn.com/2018/11/27/health/fda-medical-devices/index.html.

If you’re planning on something short-term, however, you can consider an operating lease instead, which is more like a rental with an option to buy. The lessor is the owner of the equipment, but by the end of the lease term, you can decide to return it or purchase it.

Overall Lease Cost

Aside from the type of lease agreement, cost is another crucial consideration you need to make. When you compare different leasing firms, focus on the following:

Interest Rates

When you talk about financing, interest rate makes up the bulk of the cost. Definitely, the lower, the better, but you have to know more details, such as how often and the manner this will be applied.

Origination Free

This fee is more common with loans than with leases, but it’s usually applied upfront. It is removed from the money you get as you receive your capital.

Administrative Fee

This may be explained to you in many ways by your financier, but to put it simply, it’s a fee for servicing your account. You may have to pay it just once, or at particular intervals.

Downpayment

This is a percentage of the total amount of the equipment, which you are expected to pay upfront when you apply for an equipment loan. Leases, however, do not require a downpayment in most cases, but you might be expected to pay the first and last installments upfront.  Look for medical equipment leasing companies here!

Monthly Payment

This is the amount of cash you are expected to pay with every billing cycle (typically monthly). A bigger monthly payment means a lower residual fee (this is the unpaid amount that is left by the end of the lease and which you need to pay off if you want to purchase the equipment at avtechcapital.com.