Equipment Leasing: How it Works
The value proposition for leasing equipment and financing equipment is that it offers businesses significant financial benefits and is less capital intensive than an outright purchase.
An Equipment Lease is a simple agreement between the owner (lessor) of the equipment and the user (lessee) of the equipment that allows the lessee to have use of the equipment for a negotiated term and a fixed rate monthly payment and a pre-determined purchase option at the end of the term. The user (lessee) will select the exact equipment they need from the vendor of their choice and negotiate the price.
Flexible “end of term” Options
$1/$101 buy-out: This is the purchase option amount at the end of a capital lease or finance lease. Very simply this is a fixed rate term obligation throughout the entire life of the term and at the end of the term the lessee pays $1.00 or $101 in certain states and ownership is transfer to the lessee.
FMV (fair market value): Purchase option at the end of an operating lease or true lease for the equipments then fair market value (FMV) or 10% option amount. The lease payments are an operating expense (rent expense) and are tax deductible against total taxable revenues. The leased asset is not an asset on the company’s balance sheet. Therefore, this type of lease is often referred to as off-balance-sheet financing.
10% PUT (Purchase upon Termination): This option requires a 10%, residual payment at the “end of term”. The lessee is obligated to pay a predetermined percent of the original equipment cost at the termination of the lease. By leaving a residual amount at the end of the lease, the monthly payment is lowered and provides your business some tax benefits.
Complete our lease credit application and fax to (863) 583-3100 or call our toll free number 866-268-9504 for a free no obligation lease consultation and quote from one of our experienced lease consultants now.
Upon receiving your completed application Sun South will promptly process for prelimenary approval within 24 hours. Documents are executed to you via fax or email for authorized signature(s). The equipment you have chosen will be delivered for acceptance, and/or installed if necessary.
Sun South will overnight payment to the equipment vendor/dealer within 24 hours of receiving confirmed delivery and acceptance of all equipment listed under the term agreement. It’s that simple and easy.