FAQ

Leasing Options and Answers

Fair Market Value Purchase Option

This lease is especially beneficial to those who want the tax benefits that leasing can provide along with the lowest monthly payments. This plan offers the most options at the end of the lease including return of the equipment to the lessor, purchase of the equipment for its then fair market value or the customer can opt to extend the lease or upgrade to new equipment.

10% Purchase Option

This plan is particularly attractive to customers who are uncertain about purchasing the equipment at the end of the lease but want the advantage of a fixed purchase price and a lower monthly payment. Like a fair market value lease, this plan also offers various end-of-lease options.

$1.00 Purchase Option

For those who are certain they want to purchase the equipment at the end of the lease term, this is the recommended plan. After all lease payments have been made, the customer can simply purchase the equipment for $1.00. This plan may not be available in certain states.

Compare Leasing with Other Payment Options

Here is an analysis of how leasing compares with other payment methods in several key areas:

Question	Lease	Loan/Credit Line	Cash
What will your total costs be for the product and how much will you have to pay at date of purchase?	Low up front cost - either one or two payments. Manageable monthly lease payment. Upgrade option on operating leases. Full ownership on capital leases.	Typically at least a 20% down payment. Bank usually only finances 80% of total cost. Rates range from 6 - 18%. Full ownership at end of loan.	Total due. Paying for product with after tax dollars.
What are your payment structure options?	1 - 5 yr lease terms available. Buyout options: $1 or 10%. Ability to structure as operating or capital lease.	Banks may restrict to shorter terms.	Total due. Paying for product with after tax dollars.
How will it affect your cash flow & credit availability?	Low up front cost - keeps working capital for business. If guaranteed - lease will show up on credit report.	Large down payment often due. Listed as revolving debt on credit report.	Cash flow may be depleted by large up front payment.
What are the tax advantages?	100% write-off when structured as operating lease.	Can only write off interest portion of loan. Principal is depreciated.	Paying with after tax dollars.
What about the concern of obsolescence?	Upgrades and add-ons can be built into lease agreement to avoid obsolescence.	You own the equipment at the end of payment regardless if it has become outdated.	You own the equipment at the end of payment regardless if it has become outdated.
Overall comparison	Low up front cost, retain capital strength, upgrade options, quick application process (no financials needed), asset management.	Company should keep their credit line available for emergencies - not equipment purchases. Requires annual renewal.	Not a good option - want to keep as much money for working capital as possible.